After touching three-month lows late last week, gold prices turned into a recovery mode on Monday. The bullion was rejected from $1,456 and opened with a bullish gap, gaining traction amid renewed trade uncertainty. For the week, gold recorded its biggest weekly fall in the last three years. In the short-term charts, the precious metal remains under the selling pressure as long as it stands below at least the $1,480 figure. In part, gold is supported by buying by central banks, led by PBOC.
Risk sentiment turned sour at the start of a new trading week. On Sunday, Trump noted that trade talks with China were moving very nicely. At the same time, the US leader denied the reports that the two countries have agreed to toll back some of existing mutual tariffs as part of a so-called interim deal. This statement in turn spurred concerns over global economic slowdown.
Additionally, fresh economic data out of China showed that the producer prices index saw the steepest decline in more than three years in October, with the indicator plunging 1.6%, more than -1.5% expected. The report provided further confirmation that the economy suffers from the trade spat with the US and could see further slowdown in growth along with the declining domestic demand.
Early this week, reports about fresh violent protests in Hong Kong added to the negative pressure on risky assets, which supported gold prices as well. As massive protests in the city are entering their sixth month, concerns over the economic consequences continue to persist, adding to a cautious tone by global investors.
Technically, the downside risks for gold still persist in the short term, with the bullion seems to be attracting sellers on bullish attempts. At the current levels, the yellow metal looks attractive for bulls but the market needs some additional drivers to extend the pullback from local lows. As long as the bullion remains below the 100-DMA around $1,477 and the $1,500 psychological handle, the selling pressure prevails, and downside risks remain. Once above the mentioned moving average, the prices could the $1,490 intermediate resistance.