• Gold edges higher for the second straight day and remains close to over a two-week peak.
• Retreating US bond yields undermines the US Dollar and lends some support to the metal.
• Bets for more rate hikes by the Federal Reserve might keep a lid on any meaningful gains.

Gold price attracts some buying for the second successive day on Tuesday and remains well within the striking distance of over a two-week high touched the previous day. The XAU/USD trades above the $1,920 level during the Asian session and draws support from a modest US Dollar (USD) downtick.

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, retreats further from its highest level since June 1 set on Friday and is seen as a key factor lending support to the Gold price. The USD downtick could be attributed to a further pullback in the US Treasury bond yields, though the possibility of more interest rate hikes by the Federal Reserve (Fed) should help limit any meaningful decline. In fact, Fed Chair Jerome Powell, in a keynote address at the Jackson Hole Symposium, said on Friday, that inflation remains too high and that the central bank is ready to continue hiking rates to tame persistently high prices.

Apart from sticky inflation, a surprisingly resilient US economy could force the Fed to keep interest rates higher for longer. The expectations had pushed the yield on the benchmark 10-year US government bond to its highest level since November 2007 last week and should continue to act as a tailwind for the USD. This, along with a positive risk tone, bolstered by new measures rolled out by China over the weekend to draw investors back into its battered stock markets, should contribute to capping the safe-haven Gold price. This, in turn, warrants some caution before positioning for any further appreciating move for the XAU/USD.

The downside, meanwhile, seems cushioned, at least for the time being, in the wake of worries about a deeper global economic downturn, particularly in China, which tends to benefit the traditional safe-haven Gold price. Hence, the market focus will remain glued to this week's release of Chinese PMI prints for August. Apart from this, investors will take cues from important US macro data scheduled at the beginning of a new month, including the closely-watched Non-Farm Payrolls (NFP) report. This, in turn, will provide some meaningful impetus and help in determining the next leg of a directional move for the precious metal