• Gold price pulls back from the vicinity of the monthly peak retested earlier this Tuesday.
• Bulls opt to lighten their bets amid a positive risk tone and ahead of the US inflation data.
• Geopolitical risks and bets for a 50-bps rate cut by the Fed should help limit the downside.

Gold price (XAU/USD) rallied more than 1% on Monday amid safe-haven flows on the back of concerns about a wider conflict in the Middle East and Ukraine's surprise offensive attack on Russia. Furthermore, dovish Federal Reserve (Fed) expectations kept the US Dollar (USD) bulls on the defensive and pushed the non-yielding yellow metal back closer to the monthly top during the Asian session on Tuesday.

That said, the upbeat market mood prompts some selling around the Gold price during the Asian session on Tuesday. Bulls also seem reluctant and prefer to wait for the release of the US inflation figures before positioning for any further appreciating move. Nevertheless, the commodity remains close to the all-time peak touched in July and seems poised to break through a short-term range held over the past month or so.

Daily Digest Market Movers: Gold price might continue to draw support from Middle East tensions and dovish Fed expectations

• Israel stepped up its operations near the southern Gaza city of Khan Younis on Monday amid the risk of a broader conflict in the Middle East, boosting demand for the safe-haven Gold price. 
• Israel is also preparing for the possibility of an imminent attack by Iran and the Lebanese group Hezbollah in retaliation for the assassination of Hamas leader Ismail Haniyeh in Tehran in late July. 
• Russian President Vladimir Putin told Ukraine to expect a worthy response to its recent cross-border incursion into western parts of the Kursk region, which was about 12 km deep and 40 km wide.
• This comes on top of market expectations for a bigger, 50 basis points interest rate cut by the Federal Reserve in September and continues to act as a tailwind for the non-yielding yellow metal.
• The upside for the XAU/USD, however, remains capped in the wake of a positive risk tone and as traders opt to move to the sidelines ahead of the critical US inflation figures. 
• The US Producer Price Index (PPI) is due on Tuesday, followed by the US Consumer Price Index (CPI) on Wednesday and should provide fresh cues about the Fed's policy path. 
• The readings are expected to show that inflation cooled in July, giving the US central bank headroom to start its policy-easing cycle, supporting prospects for further gains for the commodity.