Gold extended the losses on Friday as the selloff in equity markets continued to weigh on the precious metal. In fact, gold has been tightly correlated with equities recently, with the losses likely driven by investors liquidating positions to cover losses elsewhere in their portfolios.To understand the mechanics, imagine that an investment fund holds stocks, gold and government bonds. Some stocks suddenly crash, and the fund suffers losses on leveraged positions. The fund may need to raise cash to meet margin calls, reduce leverage or satisfy investor redemptions. Rather than selling only the assets that caused the losses, it may sell whatever it can liquidate quickly. Gold is particularly useful in this situation because it is highly liquid and can be sold quickly.This week started with a positive tone given the lack of US attacks on Iran over the weekend and the latest diplomatic developments. Iran has proposed a two-day framework to reopen the Strait of Hormuz in exchange for US concessions, including sanctions relief, the release of frozen assets and changes to the US military presence. However, the US has not accepted the proposal yet.Nevertheless, the markets interpreted the shortened timeline for the reopening of the Strait of Hormuz as a positive development as expectations for a potential deal strengthened. This could provide some support for gold and limit the downside. GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that gold(CFD contract) extended the losses on Friday and eventually reached the key support zone around the 3,885 level where we have also the major upward trendline for confluence. This where we can expect the buyers to step in, with a defined risk below the trendline, to position for a rally into new record highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 3,500 level next. GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we have a minor resistance zone around the 3,980 level. If the price gets there, we can expect the sellers to step in around the resistance, with a defined risk above it, to keep targeting a break below the upward trendline. The buyers, on the other hand, will look for a break higher to increase the bullish bets into new highs, with the major downward trendline as the first target.GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we have a minor downward trendline defining the bearish momentum on this timeframe. We can expect the sellers to continue to lean on the trendline, with a defined risk above it, to keep targeting new lows. The buyers, on the other hand, will look for a break higher to increase the bullish bets into new highs. The red lines define the average daily range for today.UPCOMING CATALYSTSTodaywe have the US ISM Manufacturing PMI. Tomorrow, we have the US Job Openings data and the US midterm elections. On Wednesday, we have the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims data. On Friday, we conclude the week with the US NFP report and the University of Michigan Consumer sentiment survey. This article was written by Giuseppe Dellamotta at investinglive.com.