Gold futures finished lower last week after spiking to its lowest level since the week-ending December 23, 2016. The catalyst behind the selling pressure was a stronger U.S. Dollar which surged to its highest level since the week-ending May 19, 2017. The rally in the dollar was fueled by a sell-off in emerging market currencies which was triggered by a collapse in the Turkish Lira.

For the week, December Comex gold futures settled at $1183.10, down $35.90 or -2.95%. Earlier in the week, the market hit a low of $1167.10.

The gold market did manage to gain back some of its losses when the dollar weakened after Chinese officials announced they would hold low level trade talks with the United States this week. This created some optimism that the lingering trade dispute between the world’s largest economies could soften or even end.

In other news, U.S. Core Retail Sales rose 0.6% in July, beating the 0.3% estimate. However, June’s reading was revised lower to 0.2%. Retail Sales climbed 0.5% versus 0.1%. The previous report was revised down to 0.2%.

Minor reports were mixed with the Empire State Manufacturing Index coming in at 25.6, well-above expectations. Building Permits were flat. However, missing the mark last month and coming in lower were Housing Starts, the Philly Fed Manufacturing Index and Preliminary University of Michigan Consumer Sentiment.

Forecast

Friday’s lack of follow-through to the upside and weakness in the Turkish Lira could be signs that the sell-off in gold is not over. This week’s price action will be driven by a series events including the financial turmoil in Turkey, the trade talks between the U.S. and China, and the central banker symposium in Jackson Hole, Wyoming.

Although the situation in Turkey appears to be manageable, the threat of more U.S. sanctions unless Turkey hands over detained American evangelical pastor Andrew Brunson could fuel another round of fresh selling pressure against gold.

Optimism at the start of talks between the U.S. and China could hold gold prices steady, but the next more in the precious metal will likely be influenced by the outcome of these talks. The lack of progress could prove to be disappointing for investors, which is likely to lead to further weakness in gold.

Domestic economic data that could fuel a reaction in the dollar is Existing Home Sales, Durable Goods reports and the release of the Federal Open Market Committee meeting minutes on Wednesday.

Global central bankers will be at the forefront this week also with the start of the Jackson Hole Symposium on Thursday. Investors will be looking for comments on inflation, interest rates and the threat of a global recession due to the numerous trade disputes taking place at this time. Of particular interest could be the state of the emerging markets. The central banks could also talk about stock market volatility and the general unrest in the global economy led by an economic collapse in Venezuela and the currency collapse in Turkey.