• Gold price regins positive traction on Friday, though lacks strong follow-through buying.
• A softer risk tone, along with subdued US Dollar demand, lend support to the XAU/USD.
• Bulls seem reluctant to place aggressive bets ahead of next week's central bank event risks.

Gold price attracts some dip-buying during the Asian session on Friday and reverses a part of the previous day's retracement slide from the $1,987-$1,988 region, or over a two-month peak. The XAU/USD currently trades just below the $1,975 level, up over 0.15% for the day, though the fundamental backdrop warrants some caution before positioning for any further appreciating move.

Reviving safe-haven demand benefit Gold price

A generally softer tone around the equity markets, along with concerns over slowing economic growth in China, the worsening US-China trade ties and geopolitical risks, continue to lend some support to the safe-haven precious metal. Apart from this, the subdued US Dollar (USD) price action turns out to be another factor benefitting the Gold price. In fact, the USD Index (USD), which tracks the Greenback against a basket of currencies, is seen consolidating the overnight gains to over a one-week high as traders seem uncertain about the Federal Reserve's (Fed) future rate-hike path.

Uncertainty over Fed's rate-hike path caps XAU/USD

It is worth mentioning that the markets have been pricing out the possibility of any further interest rate hikes after the anticipated 25 basis points (bps) lift-off at the upcoming Federal Open Market Committee (FOMC) meeting on July 25-26. That said, the upbeat Initial Jobless Claims data released from the United States (US) on Thursday pointed to a still-tight labour market and supports prospects for further policy tightening by the Fed. This further raises doubts if the Fed will commit to a more dovish policy stance or stick to its forecast for a 50 bps rate hike by the end of this year.

Focus remains on next week's key central bank meetings

Hence, the focus will remain glued to the highly-anticipated FOMC policy decision, due to be announced next Wednesday. This will be followed by the European Central Bank (ECB) meeting on Thursday and the latest monetary policy update by the Bank of Japan (BoJ) on Friday. Heading into the key central bank event risk, traders might refrain from placing aggressive directional bets and prefer to wait on the sidelines. This could lead to subdued price action around the Gold price in the absence of any relevant market-moving economic data from the US on Friday.

Gold price is poised to register gains for the third straight week

Nevertheless, the XAU/USD remains on track to end in the green for the third successive week and the recent breakout through a cluster of resistance favours bullish traders. Hence, any meaningful corrective decline might still be seen as a buying opportunity and is more likely to remain limited, at least for the time being.