Gold flirts with daily tops, around $1740 level ahead of Powell’s testimony

• Gold regains some positive traction on Tuesday amid sustained USD selling.
• Sliding US bond yields remained supportive amid worsening US-China relations.
• Optimism over coronavirus vaccine might cap gains ahead of Powell's testimony.

Gold edged higher during the early North American session and was last seen trading near the top end of its daily trading range, around the $1740 region.

Following the previous day's sharp pullback from multi-year tops, the precious metal managed to regain some positive traction on Tuesday. The uptick was being supported by sustained US dollar selling bias, though lacked any strong follow-through buying.

The greenback retreated further from three-week tops set last Friday and was pressured by a modest pullback in the US Treasury bond yields. This coupled with concerns over worsening US-China relations extended some support to the dollar-denominated commodity.

However, encouraging data on coronavirus vaccine trial added to the recent optimism over the re-opening of economies in some parts of the world. This, in turn, might undermine the precious metal's perceived safe-haven demand and keep a lid on any strong gains.

Apart from this, investors also seemed reluctant to place any aggressive bets and preferred to wait on the sidelines ahead of the Fed Chair Jerome Powell's congressional testimony. Powell's comments will be closely scrutinized for clues about the future policy path, which will play a key role in determining the next leg of a directional move for the non-yielding yellow metal.

Technical levels to watch