Gold edges higher on safe-haven flows; remains below $4,050 amid Fed's hawkish tilt

• Gold attracts buyers for the second straight day amid reviving safe-haven demand.
• The Fed's hawkish stance acts as a tailwind for the USD and caps the yellow metal.
• The US-China trade optimism further warrants some caution for the XAU/USD bulls.

Gold (XAU/USD) is seen trading with a positive bias for the second straight day on Friday and looking to build on this week's recovery from sub-$3,900 levels, or the lowest level since October 6. The commodity, however, lacks follow-through buying and remains below the $4,050 level amid mixed fundamental cues.

The growing market concerns that a prolonged US government shutdown would impact the economic performance keep a lid on the post-FOMC US Dollar (USD) rise to the highest level since early August and weigh on investors' sentiment. This, in turn, is seen as a key factor acting as a tailwind for the safe-haven Gold. However, the US Federal Reserve's (Fed) hawkish tilt holds back the XAU/USD bulls from placing aggressive bets.

The US central bank lowered its benchmark overnight borrowing rate to a range of 3.75%-4% and said it would stop reducing the size of its balance sheet as soon as December, marking the end of its quantitative tightening program. Meanwhile, Fed Chair Jerome Powell said that a further reduction in the policy rate at the December meeting is not a foregone conclusion. This, in turn, favors the USD bulls and caps the non-yielding yellow metal.

Apart from this, the latest optimism led by a de-escalation of trade tensions between the US and China - the world's two largest economies - contributes to keeping a lid on the Gold price. Hence, it will be prudent to wait for strong follow-through buying before confirming that the recent sharp corrective decline from the all-time peak, touched earlier this month, has run its course and positioning for any meaningful near-term appreciating move.