Gold Price Forecast: XAUUSD remains on the defensive below 200-DMA, around $1,835 area

• Gold oscillated in a narrow trading band below the 200-DMA for the second straight day.
• The risk-on impulse, rising US bond yields, aggressive Fed rate hike bets exerted pressure.
• Modest USD weakness offered some support to the metal and warrants caution for bears.

Gold continued with its struggle to gain any meaningful traction on Tuesday and remained confined in a narrow trading band for the second successive day. The XAUUSD seesawed between tepid gains/minor losses through the early European session and was last seen trading in neutral territory, around the $1,835 area, just below the very important 200-day SMA.

The risk-on impulse - as depicted by a generally positive tone around the global equity markets - turned out to be a key factor that acted as a headwind for the safe-haven gold. Apart from this, a pickup in the US Treasury bond yields further contributed to capping the upside for the non-yielding yellow metal. The markets seem convinced that the US central bank would stick to its aggressive policy tightening path to combat stubbornly high inflation. This, in turn, assisted the US bond yields to stall the post-FOMC retracement slide from over a decade high.

The US dollar, however, struggled to attract buyers, instead was pressured by signs that there will not be any consensus for a 100 bps rate hike in the foreseeable future. Fed Governor Christopher Waller said on Sunday that he was "all in" on bringing down inflation and was open to another rate hike of 75 bps in July, though ruled out the more extreme scenario of a 100 bps hike. This was seen as the only factor that offered some support to the dollar-denominated gold and helped limit the downside, at least for the time being, warranting caution for bearish traders.

The mixed fundamental backdrop might hold back traders from placing aggressive directional bets ahead of Fed Chair Jerome Powell's testimony on Wednesday and Thursday. In the meantime, traders on Tuesday will take cues from the release of Existing Home Sales data from the US. This, along with the US bond yields, will influence the USD price dynamics. Apart from this, traders will take cues from the broader market risk sentiment to grab short-term opportunities around gold.