Gold Price Forecast: XAU/USD maintains position below $2,000 ahead of US data

• Gold price recovers the recent losses on improved risk sentiment.
• Escalation in Middle-East conflict could drive the demand for the safe-haven asset Gold.
• Updates from China might contribute to a positive shift in market sentiment.
• Softer US Treasury yields are undermining the US Dollar.

Gold price treads waters near the $1,980 post-intraday gains during the Asian session on Tuesday. The price of the precious metal receives upward support due to the correction in the US Dollar (USD), which could be attributed to the downbeat US Treasury yields.

The US Dollar Index (DXY) continues its four-day losing streak, hovering around 105.50. After peaking at 5.02%, the 10-year Treasury yield swiftly reversed course, dropping to 4.84% in the latest update. If US bond yields continue to decline, the US Dollar would be kept lower, which could provide support for Gold prices to reach the $2,000 mark.

Geopolitical tensions between Israel and Hamas typically drive demand for gold as a safe-haven asset. However, the current risk-on sentiment could pose a challenge to Gold prices following the diplomatic efforts to ease tensions in the Israel-Hamas Gaza Strip, which have reduced market risk aversion. However, there are growing calls within Israel to reassess the potential scope of a ground invasion of Gaza, which had been anticipated in the near term.

The disclosure of China's plan to authorize slightly over 1 trillion yuan in additional sovereign debt issuance potentially improved the market sentiment. Furthermore, positive discussions between the US and China during their first meeting of the economic working group have contributed to an improved market sentiment. This has kept the safe-haven US Dollar under pressure, leading to an appreciation in the price of Gold.

Market watchers gear up for a data-packed week. Tuesday will see scrutiny of the US S&P Global PMI, followed by a close watch on Thursday for Q3 Gross Domestic Product (GDP) figures. The week concludes with a focus on the Core Personal Consumption Expenditures (PCE) on Friday.