• Gold price draws some support from escalating geopolitical tensions in the Middle East.
• Sliding US bond yields also benefit the XAU/USD, though a bullish USD caps the upside.
• Traders also seem reluctant ahead of the crucial two-day FOMC monetary policy meeting.

Gold price (XAU/USD) kicks off the new week on a positive note, albeit struggles to build on strength and remains below the 50-day Simple Moving Average (SMA) during the Asian session. Traders now seem reluctant and opt to wait for more cues about the timing of when the Federal Reserve (Fed) will start cutting interest rates before placing fresh directional bets. Hence, the focus will remain glued to the outcome of the highly-anticipated two-day FOMC monetary policy meeting starting on Tuesday.

In the meantime, the killing of three US Army soldiers in a drone attack by radical Iran-backed militant groups raises the risk of a major escalation of geopolitical tensions in the Middle East. Adding to this, a generally weaker tone around the equity markets should act as a tailwind for the safe-haven Gold price. That said, diminishing odds for a more aggressive policy easing by the Fed act as a tailwind for the US Dollar (USD) and hold back bulls from placing aggressive bets around the XAU/USD.