Gold clings to modest gains, bulls await a sustained move beyond $1600 mark

• Gold regains some traction amid expectations of policy easing by major central banks.
• Improving risk sentiment, rebounding US bond yields, a modest USD uptick capped gains.

Gold held on to its mildly positive tone through the early European session on Tuesday, albeit seemed struggling to extend the momentum beyond the $1600 mark.

Following the previous session's good two-way price moves, the non-yielding yellow metal managed to regain some positive traction on Tuesday amid speculations of potential monetary policy easing by major central banks.

The upside is likely to remain capped

Against the backdrop of action promised by global central banks, the US equity markets made a solid come back on Monday. The spillover effect undermined demand for the precious metal's safe-haven demand and capped the upside.

The risk-on flow triggered a strong recovery in the US Treasury bond yields, which helped ease the recent bearish pressure surrounding the US dollar and might further collaborate towards keeping a lid on the dollar-denominated commodity.

Moving ahead, Tuesday's key focus will remain on G7 conference call, which might provide some fresh impetus and help determine the metal's near-term trajectory amid absent relevant market moving economic releases from the US.

Technical levels to watch