Gold price attracts some buying on Tuesday and snaps a four-day losing streak to a one-week low.
Looming recession risks lend support to the safe-haven metal amid a modest US Dollar downtick.
The upside seems limited ahead of this week's key central bank event risks and important US data.
Gold price gains some positive traction during the Asian session on Tuesday and for now, seems to have snapped a four-day losing streak to over a one-week low touched the previous day. The XAU/USD currently trades around the $1,960 level, up 0.25% for the day, as traders keenly wait this week's key central bank event risks.
Combination of factors benefits safe-haven Gold price
Looming recession risks, the worsening relations between the United States (US) and China - the world's two largest economies - and geopolitical risks cap the recent optimism in the markets. Worries about a deeper global economic downturn reignited on Monday following the disappointing release of the Purchasing Managers' Index (PMI) prints for July. The survey showed broad-based decline in business activity across the manufacturing and services sector in the Euro Zone, the United Kingdom (UK) and the United States (US). This, in turn, is seen as a key factor lending some support to the safe-haven Gold price.
Modest US Dollar downtick also lends support to XAU/USD
Apart from this, a modest US Dollar (USD) pullback from over a two-week top turns out to be another factor underpinning the XAU/USD. The downside for the USD, meanwhile, seems limited ahead of the highly-anticipated Federal Open Market Committee (FOMC) policy meeting, starting this Tuesday. The Federal Reserve (Fed) will announce its decision on Wednesday and is widely anticipated to hike interest rates by 25 basis points (bps). Apart from this, the focus will be on the accompanying monetary policy statement and Fed Chair Jerome Powell's remarks at the post-meeting press conference.
Focus remains on central banks and key US macro data
Investors will look for fresh cues on future rate-hike path, which, in turn, will play a key role in infuencing the USD price dynamics and provide a fresh directional impetus to the US Dolllar-denominated Gold price. In the meantime, skepticism 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 should allow the USD to presreve the recent strong recovery gains from its lowest level since April 2022 touched last Tuesday. This might hold back traders from placing aggressive directional bets and cap any further gains for the XAU/USD.
Apart from the high-anticipated Fed decision, this week's rather busy week also features the release of important US macro data, including the Advance Q2 GDP report and the Core PCE Price Index (the Fed's preferred inflation gauge). Investors will also look to the European Central Bank (ECB) meeting on Thursday, followed by the Bank of Japan (BoJ) monetary policy update on Friday, which should further contribute in determining the near-term trajectory for the non-yielding Gold price. This makes it prudent to wait for some follow-thruogh buying before positioning for any further gains for the XAU/USD
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