Gold is trading back below its highly psychological $1100/oz level amid weakness in the Cable and Aussie. Gold’s large leg down during today’s Asia trading session is a bit mysterious since the precious metal exhibited a relative weakness. That being said, investors should keep an eye on activity in the Dollar. Investors will have their eyes fixed on U.S. New Home Sales and Bernanke’s Congressional testimony. Statements from Bernanke have the potential to create 
considerable volatility in the FX markets. Hence, should Bernanke give any hints regarding a tighter monetary policy from the Fed, this could favor the Dollar and place further downward pressure on gold. On the other hand, should Bernanke reiterate a loose monetary policy for the foreseeable future the risk trade may be able to continue its stabilization and keep gold around $1100/oz. However, the risk trade is tilting lower ahead of Bernanke, so it will be interesting to see how today’s trading session plays out. Meanwhile the psychological $1100/oz level could continue to have an influence on gold. Volatility in the FX markets could continue tomorrow with the release of Durable Goods Orders along with statements from King and Bernanke. Investors should also keep an eye on the EUR/USD and Cable and their ability to hold above February lows.
Technically speaking, gold faces multiple downtrend lines along with intraday and 2/22 highs. As for the downside, gold has multiple uptrend lines serving as technical cushions along with 2/18 lows and the highly psychological $1100/oz level should it be tested.
Present Price: $1094.25/oz
Resistances: $1096.04/oz, $1098.51/oz, $1100.74/ oz, $1106.18/oz, $1107.91/oz
Supports: $1093.81/oz, $1091.58/oz, $1089.87/oz, $1087.66/oz, $1085.21/oz, $1083.25/oz
Psychological: $1100/oz, $1125/oz, February highs and lows
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