Gold Price Forecast: XAU/USD sticks to gains near multi-week high, around $1,780 area

• Gold gains traction for the fifth straight day and climbs to a four-week high on Tuesday.
• Declining US bond yields and the risk-off mood continue to offer support to the XAU/USD.
• A goodish USD bounce from a multi-week low is acting as a headwind for the commodity.

Gold builds on last week's bullish breakout momentum through the $1,745-$1,750 resistance zone and gains traction for the fifth successive day on Tuesday. The momentum remains uninterrupted through the early North American session and lifts spot prices to a four-week high, around the $1,788 region.

The ongoing decline in the US Treasury bond yields continues to offer some support to the non-yielding gold. In fact, the yield on the benchmark 10-year US government bond drops to a four-month low amid reduced bets for larger interest rate hikes by the Federal Reserve. It is worth recalling that the Fed last week hinted that it could slow the pace of the current rate hike cycle at some point. Furthermore, the Advance US GDP report released last Thursday confirmed a technical recession and forced investors to scale back expectations for a more aggressive policy tightening by the Fed.

Apart from this, the prevalent risk-off mood further benefits the safe-haven precious metal. The market sentiment remains fragile amid growing worries about a global economic downturn. Furthermore, mounting diplomatic tensions over US House Speaker Nancy Pelosi's Taiwan visit temper investors' appetite for perceived riskier assets. In fact, Wang Yi, senior Chinese diplomat and the Foreign Minister, warned on Tuesday that the US politicians are openly playing with fire with the Taiwan issue. This, in turn, is driving flows towards traditional safe-haven assets, including the XAU/USD.

That said, a goodish US dollar bounce from a four-week trough touched earlier this Tuesday is acting as a headwind for the dollar-denominated gold. That said, the aforementioned factors should continue to lend some support to the XAU/USD ahead of the next key data point from the US, the monthly jobs report (NFP) on Friday. This makes it prudent to wait for strong follow-through selling before confirming that the recent recovery from a 15-month low, around the $1,680 region touched in July, has run out of steam. In the absence of any major market-moving economic releases, the US bond yields, the broader risk sentiment and the USD price dynamics would continue to influence spot prices.

Technical levels to watch