Gold price has retreated from a nearly two-month high reached at the beginning of the week, sticking to intraday losses during the European session. Despite a positive risk tone affecting XAU/USD, the downside is limited, with trade uncertainties, geopolitical risks, and a weaker US dollar potentially supporting the precious metal.

Geopolitical tensions in the Middle East and expectations of further interest rate cuts by the Federal Reserve are contributing to the depressed USD and helping Gold price stay above $3,400. Traders are waiting for the outcome of the upcoming FOMC monetary policy meeting for more direction.

Iran's missile strikes on Israel and ongoing trade policy uncertainties under President Trump have boosted safe-haven demand, driving Gold price to a two-month peak. However, a positive tone in Asian equities and a slight USD uptick are limiting further gains for the commodity.

The focus is now on the FOMC policy decision expected to be announced on Wednesday, with the market anticipating the Fed to keep interest rates unchanged. The outcome will influence USD dynamics and provide momentum for XAU/USD. Any escalation in Middle East tensions could continue to support Gold price.

Technically, a breakout above $3,400, an ascending trend channel on short-term charts, and positive oscillators on the daily chart favor Gold bulls. A dip below $3,400 could be a buying opportunity, while a break above $3,453 could lead to a challenge of the all-time peak at $3,500.