• Gold price continues losing ground for the third straight day and drops to a nearly one-month low.
• A combination of factors continues to boost the US Dollar and drive flows away from the XAU/USD.
• Worries about a global economic slowdown could lend some support to the safe-haven commodity.

Gold price drifts lower for the third successive day - also marking the sixth day of a negative move in the previous seven - and drops to a nearly one-month low during the first half of the European session. The XAU/USD currently trades just above the $1,970 level, down nearly 0.50% for the day, and is pressured by a combination of factors.

Sustained US Dollar buying continues to weigh on Gold price

The US Dollar (USD) prolongs its recent uptrend witnessed over the past two weeks or so and touches a fresh high since March 24, which, in turn, is seen driving flows away from the US Dollar-denominated Gold price. Against the backdrop of speculations that the Federal Reserve (Fed) will keep interest rates higher for longer, the optimism over the potential lifting of the debt ceiling in the United States (US) remains supportive of elevated US Treasury bond yields and underpins the USD.

US debt ceiling optimism further undermines the safe-haven XAU/USD

It is worth recalling that the recent hawkish comments by several Fed officials pushed back against market expectations for rate cuts later this year. Furthermore, US President Joe Biden and top congressional Republican Kevin McCarthy underscored their determination to strike a deal soon to raise the government's $31.4 trillion debt ceiling. This helps calm fears of an unprecedented American debt default and boosts investors' confidence, which further weighs on the safe-haven Gold price.

Looming recession fears could lend some support to Gold price

Market participants, however, remain worried about slowing global growth, particularly in China, which could lend support to the XAU/USD and help limit deeper losses, at least for the time being. Traders might also refrain from placing aggressive bets ahead of Fed Chair Jerome Powell's appearance on Friday. Investors will look for fresh clues about the US central bank's near-term policy outlook, which should help determine the next leg of a directional move for the Gold price.

Thursday’s US macro data and Fed speaks eyed for fresh impetus

In the meantime, traders will look to Thursday's US economic docket, featuring the release of the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Existing Home Sales, for some impetus. Apart from this, scheduled speeches by Fed members, the US bond yields and the US debt-limit negotiations will influence the USD price dynamics. This, along with the broader risk sentiment, could produce short-term trading opportunities around the Gold price.