Gold Price Forecast: XAUUSD struggles to gain traction, hangs near multi-month low

• Gold struggled to capitalize on its modest gains recorded during the Asian session on Monday.
• Aggressive Fed rate hike bets continued underpinning the USD and acted as a headwind for gold.
• The risk-off mood, sliding US bond yields extended some support and helped limit deeper losses.

Gold seesawed between tepid gains/minor losses through the early European session and was last seen trading in neutral territory, just below the $1,810 level.

The XAUUSD, so far, has struggled to register any meaningful recovery and remained well within the striking distance of its lowest level since early February touched on Friday. Expectations that the Fed would tighten its monetary policy at a faster pace to curb soaring inflation assisted the US dollar to stand tall near a two-decade high. This, in turn, was seen as a key factor that acted as a headwind for the dollar-denominated gold.

The downside, however, remains cushioned, at least for the time being, amid the prevalent risk-off environment, which tends to benefit the safe-haven precious metal. Investors remain worried that a more aggressive move by major central banks to constrain inflation could hit global economic growth. The fears were further fueled by shockingly weaker Chinese macro data, which, along with geopolitical tensions, weighed on investors' sentiment.

The anti-risk flow dragged the benchmark 10-year US government bond yield away from the recent peak of 3.20%, which further offered some support to the non-yielding gold. Even from a technical perspective, spot prices showed some resilience below the $1,800 mark on Friday. This makes it prudent to wait for some follow-through selling and acceptance below the said handle before traders start positioning for any deeper losses for the XAUUSD.

Market participants now look forward to the release of the US Empire State Manufacturing Index for a fresh impetus later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to gold prices. Traders will further take cues from the broader market risk sentiment to grab short-term opportunities around the metal.

Technical levels to watch