• Gold price gains some positive traction for the second straight day, though lacks follow-through.
• A modest US Dollar weakness is seen as a key factor lending some support to the precious metal.
• A hawkish outlook by major central banks caps the XAU/USD and warrants caution for bulls.

Gold price kicks off the new week on a positive note and looks to build on Friday's modest bounce from the $1,910 area, or its lowest level since March 16. The XAU/USD trades around the $1,927 area, up nearly 0.35% for the day, though lacks follow-through and remains well below the 100-day Simple Moving Average (SMA) through the Asian session.

Modest US Dollar weakness lends support to Gold price

The US Dollar (USD) struggles to capitalize on its recovery move witnessed over the past two days, from the lowest level since May 11 and meets with some supply on Monday amid a modest downtick in the US Treasury bond yields. This, along with worries about ripple effects from the aborted mutiny in Russia, lends some support to the safe-haven Gold price. In fact, Russian mercenaries seized the southern city of Rostov on Saturday and advanced on Moscow, though withdrew after striking a deal guaranteeing their safety and the exile of their leader, Yevgeny Prigozhin, to Belarus.

Hawkish central banks cap gains for XAU/USD

The markets, however, react little to the latest geopolitical development, which is evident from a generally positive tone around the US equity futures and might cap gains for the safe-haven Gold price. Apart from this, a more hawkish stance adopted by major central banks might further contribute to keeping a lid on the non-yielding yellow metal. It is worth recalling that the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) delivered a surprise 25 basis points (bps) rate hike this month, while the European Central Bank (ECB) lifted rates to the highest level in 22 years.

Furthermore, the Bank of England (BoE), the Swiss National Bank (SNB) and Norges Bank all hiked their benchmark interest rates last Thursday. Meanwhile, the Federal Reserve (Fed) signalled that borrowing costs may still need to rise as much as 50 bps by the end of this year. Furthermore, Fed Chair Jerome Powell, during his two-day congressional testimony last week, reiterated that the central bank will likely raise interest rates again this year, albeit at a "careful pace", to combat stubbornly high inflation. This should limit the USD losses and act as a headwind for the Gold price.

Focus now shifts to US Core PCE Price Index on Friday

Traders might also prefer to wait for the release of the Fed's preferred inflation gauge - the Core Personal Consumption and Expenditure (PCE) price Index on Friday. The data will play a key role in influencing market expectations about the Fed's next policy move, which, in turn, will drive the USD demand and provide some meaningful impetus to the US Dollar-denominated Gold price. This makes it prudent to wait for strong follow-through buying before confirming that the XAU/USD has formed a near-term bottom and positioning for any meaningful appreciating move