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  • Gold prints three-day winning streak while extending pullback from May 27 low near $1,694.
  • The US-China tussle joins riots in most parts of America to keep the risk aversion mode on.
  • China’s Caixin PMI can offer intermediate direction while qualitative catalysts to keep the driver’s seat.

Gold prices remain firm around $1,739, intraday high $1,740.74, amid the pre-Tokyo Asian session on Monday. The bullion benefits from the escalation in risk-off mood amid the tension between the US and China while also taking clues from the riots in America.

Despite US President Donald Trump’s refrain from announcing any more sanctions on China, the South China Morning Post (SCMP) cites fears of worsening relations between the two. The reason cited by the Chinese daily is the dominance of groups calling for more ‘fighting spirit’ over those who favor dialogue and cooperation.

On the other hand, US Secretary of State Mike Pompeo criticized the ruling party of China during his Fox interview. The Trump administration official said, “this is a Chinese communist party that has come to view itself as intent upon the destruction of western ideas, western democracies, and western values.” The diplomat also said that the Chinese Communist Party’s military advances are real. 

Elsewhere, riots in the US are getting uglier with Chicago suspending bus and rail services until Monday morning.

With these catalysts favoring the rush to risk-safety, S&P 500 Futures drop over 1.0% to 3,010 by the press time.

Moving on, China’s Caixin Manufacturing PMI for May, expected 49.6 versus 49.4 prior, could offer immediate direction to the markets. However, geopolitical concerns are likely to remain in the spotlight.

Technical analysis

Having successfully breached 10-day EMA, currently around $1,728.65/60, Gold prices aim for May 20 high of $1,754 ahead of challenging the previous month’s top near $1,765.40. Meanwhile, a downside break below 10-day EMA could drag the quote towards a 50-day EMA level of $1,691.60.