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Last week, it seemed as if gold could do no wrong. Of course, there were plenty who cautioned investors about the meteoric rise of gold. And this week, if you were someone who bought into gold last week with the hope of making a good profit this week, you are likely to be sorely disappointed. Gold is significantly down, back below $1,200 an ounce — it can’t even struggle up to $1,150. (Of course, if you bought gold a couple of months ago, you are still sitting pretty. If you think that a gold bubble is still an issue, though, you might consider a little profit taking.)

Part of the problem with gold is that the U.S. dollar is showing more resiliency than thought. Even with today’s warning from Moody’s with regard to U.S. government debt and the possibility of a challenge to the Aaa sovereign credit rating, the U.S. dollar is holding its recent gains against the euro and the sterling. Here is what MarketWatch says about what’s impacting gold prices:

“The better dollar outlook and lack of inflationary pressure are hurting gold,” said George Gero, a precious-metals trader for RBC Capital Markets. “Gold has gained a lot, and more shorts [selling positions] are pressuring year-end sellers.”

Gold is often used as a hedge against inflation. Many were expecting more inflation with the easy monetary policy in place right now, and with signs of economic recovery showing. However, inflationary pressures have not appeared in the expected amounts, and that is slowing the appetite for gold.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.