• Gold price attracts some buying amid a modest US Dollar pullback from a multi-month top.
• Bets for a 50 bps rate hike by the Federal Reserve to limit the USD downfall and cap gains.
• Traders might also prefer to wait on the sidelines ahead of the key US jobs data on Friday.

Gold price edges higher on Thursday, albeit lacks any follow-through buying and remains confined well within the previous day's broader trading range. The XAU/USD currently trades just above the $1,815 level and seems vulnerable to prolonging its downward trajectory witnessed since early February.

Weaker US Dollar, recession fears lend support to Gold price

The US Dollar (USD) bulls opt to take some profits off the table following the recent strong bullish run to over a three-month top. This, in turn, is seen as a key factor lending some support to the US Dollar-denominated Gold price. Apart from this, a generally softer risk tone - amid looming recession risks - benefits traditional safe-haven assets and acts as a tailwind for the XAU/USD. The upside, however, remains capped amid the prospects for more aggressive policy tightening by the Federal Reserve (Fed).

Hawkish Federal Reserve expectations cap gains for Gold price

In fact, the markets are now pricing a greater chance of a 50 basis points (bps) lift-off at the next Federal Open Market Committee (FOMC) meeting on March 21-22. The bets were reaffirmed by hawkish comments by Fed Chair Jerome Powell on Wednesday, reiterating that interest rates would have to go higher and possibly faster to tame stubbornly high inflation. This remains supportive of elevated US Treasury bond yields and keeps a lid on any meaningful gains for the non-yielding Gold price.