Gold Price Forecast: XAU/USD remains above $1,920 amid weaker Dollar and falling US yields.

• Gold price rises for the second day in a row and remains near two-week highs.
• Falling US bond yields weaken the dollar and lend some support to the yellow metal.
• Expectations of further rate hikes from the Federal Reserve could cap any significant gains.

Gold (XAU/USD) price attracts some buying for the second day in a row on Tuesday and remains near the two-week highs hit the day before. XAU/USD is trading above the $1,920 level at the start of the European session and is supported by a modest pullback in the US Dollar (USD).

In fact, the DXY Dollar Index, which measures the strength of the dollar against a basket of currencies, has retreated further from its highest level since June 1 set on Friday and is seen as a key factor supporting the price of the dollar. Gold. The fall in the dollar could be attributed to a further decline in US Treasury yields, although the possibility of further interest rate hikes by the Federal Reserve (Fed) should help limit any significant drop. Indeed, Fed Chairman Jerome Powell, in a speech at the Jackson Hole Symposium, said on Friday that inflation remains too high and the central bank is willing to keep raising rates to persistently control prices. tall.

Aside from sticky inflation, a surprisingly resilient US economy could force the Fed to keep interest rates higher for longer. Expectations had driven the yield on the benchmark 10-year US government bond to its highest level since November 2007 last week and should continue to act as a tailwind for the dollar. This, along with a positive risk tone, bolstered by new measures put in place by China over the weekend to lure investors back into its battered stock markets, should help limit the safe haven gold price. This, in turn, warrants some caution before positioning for any further move higher in XAU/USD.

For its part, the fall seems supported, at least for the moment, amid concerns of a further global economic recession, especially in China, which tends to benefit safe-haven gold. Hence, markets are still awaiting the release of China’s PMI data for August this week. Apart from this, investors will take into account the important US macroeconomic data scheduled for the beginning of the month, including the non-farm payrolls (NFP) report. This, in turn, will provide significant momentum and help determine the next directional move for the precious metal.

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