Geopolitical Risks and Falling US Bond Yields Boost Gold Prices, But Still Below $2,040

• Gold price is on the rise for the second consecutive day, but still needs more support to keep climbing. 
• Geopolitical tensions and falling US bond yields are providing some help before the FOMC meeting. 
• Uncertainty about the timing of the first Fed rate cut may limit any significant gains.

Gold price (XAU/USD) is gaining positive momentum for the second day in a row on Tuesday, moving steadily closer to the $2,040-2,042 supply zone during the first half of the European session. Concerns about escalating tensions in the Middle East potentially sparking a wider conflict in the region are tempering recent market optimism. Additionally, a continued drop in US Treasury bond yields is a key factor supporting the non-yielding yellow metal. 

However, some buying of the US Dollar (USD) may prevent traders from making aggressive bullish moves on the Gold price. Investors may also opt to wait on the sidelines ahead of the crucial FOMC monetary policy meeting starting this Tuesday, which could provide insight into future rate decisions and generate new momentum for the XAU/USD. This suggests that caution is necessary before anticipating further intraday gains.

As traders prepare for the key central bank event, they will monitor the US economic docket on Tuesday, which includes the release of the Conference Board’s Consumer Confidence Index and JOLTS Job Openings data. These, along with US bond yields, will influence USD price movements and give impetus to the Gold price. Additionally, broader market sentiment will play a role in creating short-term trading opportunities with the safe-haven metal.

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

• Continued decline in US Treasury bond yields and the risk of heightened geopolitical tensions in the Middle East are lifting the Gold price for the second day running. 
• The US Treasury revised its federal borrowing forecast to $760 billion from a previous estimate of $816 billion, pushing the yield on the benchmark 10-year US government bond closer to 4.0%.
• Reports indicate that President Joe Biden will authorize US military action in response to a drone attack by pro-Iranian militias near the Jordan-Syria border that resulted in the deaths of three American soldiers.
• A direct US confrontation with Iran could negatively impact global Crude Oil supplies, potentially triggering inflation and hindering global economic growth.
• Traders may be hesitant to make strong directional bets and choose to remain on the sidelines ahead of the critical FOMC monetary policy meeting starting this Tuesday.
• The Fed’s decision on Wednesday and the accompanying policy statement will be closely watched for clues about the timing of the first rate cut, which will impact the non-yielding yellow metal.
• In the meantime,

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