Gold buyers look to regain control above $1,700

Gold prices extend pullback from a one-week low of $1,717.34, flashed the previous day, to currently around $1,727.40 during Friday’s Asian session. Although the US dollar recovery seems to cap the yellow metal’s rise, escalation of the US-China tussle and the coronavirus (COVID-19) keep the bullion’s safe-haven demand intact.

Following China’s indirect warning to the US, from the 13th National People's Congress, the tussle between the world’s top two economies intensified while including the Hong Kong issue as an additional point.

While diplomats from the dragon nation stand ready to counter any interference in their “personal” issues and/or allegations for the virus outbreak, US policymakers refrain to step back. Recently, the US Senate Majority Leader McConnell said that further China crackdown on Hong Kong will intensify the Senate’s interest in re-examining the US-China relationship.

On a different note, the Asian major dropped its economic growth target, 6-6.5% for GDP in 2019, during the report to the National People's Congress, as per the Bloomberg. This increases the market’s uncertainty and suggests that the dragon nation was fearing much disappointment from the GDP, which in turn supports the safe-haven demand of the metal.

Elsewhere, the virus wave 2.0 is also challenging the global policymakers to rethink their decision to restart the economies. However, US President Donald Trump recently said he will not shut down the economy during the second round of the virus.

Amid all these catalysts, the US 10-year Treasury yields stay down below 0.70% while Japan’s NIKKEI struggle for direction around 20,560 by the press time.

Considering the lack of major data/events on the economic calendar, except for the BOJ, the bullion traders may keep eyes on the qualitative catalysts for fresh direction.

Technical analysis

Failures to close below 21-day SMA level of $1,715 keeps the yellow metal directed towards the monthly top surrounding $1,765.40. Though, a downside break might not refrain from calling a sub-$1,700 area back to the chart.