The US Dollar remains on the defensive in the wake of Friday's disappointing US macro data and less-hawkish remarks by Federal Reserve officials, which is seen acting as a tailwind for the Gold price.
The ISM survey showed that business activity in the US manufacturing sector contracted more quickly than anticipated in February, with a measure of employment dropping to a seven-month low.
The US ISM Manufacturing Index fell to 47.8 from 49.1 in January amid a decline in the New Orders Index to 49.2, while the Prices Paid Index edged lower to 52.5 from 52.9 in the previous month.
Adding to this, the University of Michigan’s Consumer Sentiment Index also missed estimates and dropped to 76.9 in February, though inflation expectations were in line with the expectations.
Chicago Federal Reserve President Austan Goolsbee noted that the policy rate is quite restrictive, and Dallas Fed President Lorie Logan said that it would be appropriate to slow the pace of the balance sheet shrinking.
Fed Governor Adriana Kugler noted that progress on disinflation will continue, and Richmond Fed President Thomas Barkin said that overall inflation is likely to come down over the next few months.
Furthermore, Fed Governor Christopher Waller said that he would like the central bank to boost its share of short-term Treasuries, exerting some downward pressure on the US Treasury bond yields.
A softer risk tone also lends support to the safe-haven XAU/USD amid subdued US Dollar demand, though the upside seems limited ahead of the key US data and Fed Chair Jerome Powel's testimony.

Daily digest market movers: Gold price remains supported by bets for an imminent Fed rate cut