Gold price climbs to one-week top on softer US bond yields, geopolitical tensions

Gold price gains follow-through with a positive traction for the second consecutive day on Tuesday.

Geopolitical risks, softening of US bond yields and subdued USD demand benefit the XAU/USD.

Bets for less aggressive Fed rate cuts favor the USD bulls and might cap the precious metal.

Gold price (XAU/USD) attracted some haven flows after posting its steepest weekly drop in more than three years last week and snapped a six-day losing streak on Monday amid heightened geopolitical tensions. Adding to this, softening US Treasury bond yields prompted some US Dollar (USD) profit-taking following the post-US election rally to a fresh year-to-date and turned out to be another factor that benefited the non-yielding yellow metal.

The USD bulls remain on the defensive during the Asian session on Tuesday and assist the Gold price in recovering further from a two-month low touched last Thursday. Meanwhile, expectations are that US President-elect Donald Trump's policies will rekindle inflationary pressures and limit the scope for further rate cuts by the Federal Reserve (Fed). This should keep the US bond yields elevated and favors the USD bulls, which might cap the XAU/USD.