Gold clings to gains near session tops, inching back closer to $1650 level

• Gold regains traction on Wednesday and recovers a part of the overnight losses.
• Coronavirus fears continue to underpin the precious metal’s safe-haven status.
• Rebounding US bond yields helped revive the USD demand and might cap gains.

Gold edged higher through the Asian session on Wednesday and is currently placed near the top end of its daily trading range, around the $1644-45 region.

Having found some support near the $1625 region on Tuesday, the yellow metal managed to regain some traction on Wednesday and recover a part of the previous session's corrective slide – the first day of a negative move in the previous five.

The upside is likely to remain limited

Concerns over the global outbreak of the novel virus and its impact on the world economy helped offset a modest recovery in the global risk sentiment and continued lending some support to the precious metal's perceived safe-haven status.

This coupled with speculations that the Fed would be forced to cut interest rates sooner rather than later further underpinned the non-yielding commodity. However, a combination of factors might keep a lid on any runaway rally, at least for now.

Some initial signs of stability in the global financial markets allowed the US Treasury bond yields to stage a goodish bounce from all-time lows, which helped revive the US Dollar demand and might eventually cap gains for the dollar-denominated commodity.

In absence of any major market-moving economic releases on Tuesday, investors will keep a close eye on the latest developments around the coronavirus saga, which will continue to play a key role in producing some meaningful trading opportunities.

Technical levels to watch