Gold holds steady above $1650 level, lacks follow-through amid stronger USD

• Gold regains some positive traction on Wednesday amid the prevalent cautious mood.
• Resurgent USD demand might cap the upside for the dollar-denominated commodity.

Gold edged higher during the early European session and is currently placed near the top end of its daily trading range, around the $1654-55 region.

Following the previous day's intraday pullback from multi-week tops and an early dip to the $1640 area, the precious metal regained some positive traction in the wake of fresh worries over the coronavirus pandemic.

Investors turned cautious and took refuge in traditional safe-haven assets after the New York state – the centre of the US outbreak – and the United Kingdom announced their highest daily death toll on Tuesday.

The anti-risk flow was further reinforced by a weaker tone surrounding the US Treasury bond yields, which further underpinned the non-yielding yellow metal and remained supportive of the modest uptick.

Meanwhile, concerns over an imminent global recession continued underpinning the US dollar's demand as the global reserve currency and kept a lid on any strong gains for the dollar-denominated commodity.

Hence, it will be prudent to wait for some strong follow-through buying before traders start positioning for any further appreciating move as the key focus remains on the overall coronavirus pandemic situation.

Moving ahead, Wednesday's release of the FOMC meeting minutes might influence the USD price dynamics and produce some short-term trading opportunities in the absence of any market-moving US economic data.

Technical levels to watch