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Gold prices hold steady on Monday, treading water in a tight trading range slightly above the $1,850 zone. The precious metal failed to challenge $1,860 earlier in the day and has been consolidating since then. A slight bullish bias in the gold market is due to a weaker dollar, with the USD index clinging to the 102.00 figure, lacking demand amid a risk-on tone that dominates global financial markets at the start of the week.

The bullion has steadied in thin trading conditions following a sharp drop witnessed on Friday. Gold is likely to stay in a limited trading range for the time being as investors are getting more cautious ahead of the US inflation report due on Friday. The release would act as a fresh significant catalyst for the yellow metal as the data could affect Fed’s tightening plans. 

In particular, stronger-than-expected results are likely to put gold under pressure amid another leg higher in the US Treasury yields. In this scenario, the greenback would rally across the market and could make it difficult for the XAUUSD pair to find demand. On the other hand, confirmation of peaking inflation could force traders to start pricing in Fed’s less aggressive rate hikes and thus push gold higher.

On the upside, the immediate barrier now arrives at $1,875, followed by the $1,900 figure strengthened by the 100-DMA last seen one month ago. Should the selling pressure reemerge anytime soon, the metal would first target the $1,842 zone where the 20- and 100-DMAs converge.