Gold price touches two-week top as geopolitics and sliding US bond yields offset stronger USD

• Gold price edges higher for the second straight day, albeit lacks follow-through buying. 
• Geopolitical tensions, along with sliding US bond yields, lend support ahead of the FOMC.
• The uncertainty over the timing of the first Fed rate cut might cap any meaningful upside.

Gold price (XAU/USD) gains some positive traction for the second straight day on Tuesday and steadily climbs back closer to the $2,040-2,042 supply zone during the first half of the European session. Fears that escalating tensions in the Middle East could trigger a wider war in the region keep a lid on the recent optimism in the markets. Apart from this, a further decline in the US Treasury bond yields turns out to be a key factor lending support to the non-yielding yellow metal. 

That said, the emergence of some US Dollar (USD) buying might hold back traders from placing aggressive bullish bets around the Gold price. Investors might also prefer to wait on the sidelines ahead of the crucial FOMC monetary policy meeting starting this Tuesday, which might provide cues about future rate decisions and provide a fresh directional impetus to the XAU/USD. This, in turn, warrants some caution before positioning for any further intraday appreciating move.

Heading into the key central bank event risk, traders on Tuesday will take cues from the US economic docket – featuring the release of the Conference Board's Consumer Confidence Index and JOLTS Job Openings data. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to the Gold price. Furthermore, the broader risk sentiment should contribute to producing short-term trading opportunities around the safe-haven metal.

Daily Digest Market Movers: Gold price draws support from rising geopolitcal tensions and sliding US bond yields

• The ongoing downfall in the US Treasury bond yields, along with the risk of a further escalation of geopolitical tensions in the Middle East, lift the Gold price higher for the second straight day. 
• The US Treasury lowered its forecast for federal borrowing to $760 billion from a prior estimate of $816 billion and dragged the yield on the benchmark 10-year US government bond closer to 4.0%.
• Reports suggest that President Joe Biden will authorize US military action in response to the drone attack by pro-Iranian militias near the Jordan-Syria border that killed three American soldiers.
• A direct US confrontation with Iran will adversely impact global Crude Oil supplies, which could eventually trigger a possible inflation shock for the world economy and hinder global growth.
• Traders, however, might refrain from placing aggressive directional bets and prefer to move on the sidelines ahead of the critical FOMC monetary policy meeting starting this Tuesday.
• The Fed decision on Wednesday and the accompanying policy statement will be scrutinized for cues about the timing of the first rate cut, which will influence the non-yielding yellow metal.
• In the meantime, Tuesday's release of the Conference Board's Consumer Confidence Index and JOLTS Job Openings data from the US might produce short-term trading opportunities. 

Technical Analysis: Gold price extends the overnight breakout through 50-day SMA, flirts with $2,040-2,042 hurdle

From a technical perspective, bulls might still wait for a sustained move beyond the $2,040-2,042 supply zone before placing fresh bets and positioning for any further gains. Given that oscillators on the daily chart have just started moving into the positive territory, the Gold price could then climb to the $2,077 resistance zone before aiming to reclaim the $2,100 round-figure mark.

On the flip side, the overnight swing low, around the $2,020-2,019 area, now seems to protect the immediate downside ahead of the $2,012-2,010 zone and the $2,000 psychological mark. A convincing break below the latter will be seen as a fresh trigger for bearish traders and expose the 100-day SMA, currently near the $1,978-1,977 region. The Gold price could eventually drop to the very important 200-day SMA, near the $1,964 region.