Gold dropped significantly during the Asian session as the Middle East tensions escalated. The weakness started late yesterday after we got reports that the US military was reducing its troop presence at bases across the Middle East, while the State Department ordered staff cuts at diplomatic posts in the region. The reports linked the moves to regional threats and the possibility of US military action against Iran.The bearish momentum then pickup up after the New York Times reported that the US and Israeli militaries have developed specific plans for renewed strikes on Iran after the US midterm elections. Moreover, the report said the US is assembling forces, including three aircraft carriers, thousands of Marines, fighter jets and special operations units, which are expected to be fully in place by early November.The selloff might have been connected more to fears of a crash in the stock market as such a scenario could tighten financial conditions considerably if the Fed is forced to remain hawkish due to inflation risks. Real yields, on the other hand, fell slightly as inflation expectations remain elevated while nominal yields continue to drop on growth concerns. Tomorrow’s US Flash PMIs could be an important catalyst. If the data surprises to the downside, growth concerns might increase and we could see a dovish repricing further out the curve. In this scenario, we should see gold rising as real yields will likely fall further. Stronger than expected data, on the other hand, could quell growth fears and lead to another selloff in the precious metal. GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that gold(CFD contract) has extended the losses further after rejecting the downward trendline and it’s now threatening a breakdown. The sellers will likely continue to lean on the trendline, with a defined risk above the trendline, to keep targeting the 3,885 level. The buyers, on the other hand, will need a break above the trendline to start positioning for a rally into the 4,700 level next, with the 4,500 level as the first target.GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we can see the price bounced from the 4,070 support as the buyers stepped in, with a defined risk below it, to target a pullback into the trendline. The sellers will want to see the price breaking lower to increase the bearish bets into the 3,885 level next.GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, there’s not much we can add here as the buyers will likely continue to step in around the 4,070 support, while the sellers will look for a break to increase the bearish bets into new lows. The red lines define the average daily range for today.UPCOMING CATALYSTSToday we get the latest US Jobless Claims figures, while tomorrow we conclude the week with the US Flash PMIs. This article was written by Giuseppe Dellamotta at investinglive.com.