Gold is consolidating above its psychological $1050/oz area as activity in the FX markets cools down. Trichet attempted to calm investors this weekend at the G7 summit by implying that the ECB and EU have the situation well under control. We’ve seen multiple statements from governmental representatives hit the wires over the past couple days and it seems policy makers are looking to get the negative psychological forces under control. The tactic has worked thus far with the Cable, EUR/USD and AUD/USD all consolidating. Furthermore, the data wire is relatively quiet today, giving investors and analysts little to work with. Economic releases won’t pick up again until Wednesday’s Asia trading session with the release of Australia’s Home Loans data accompanied by China’s Trade Balance data. Furthermore, the BoE’s Inflation Report could prove to be a market mover since the central bank places considerable weight on prices when determining its monetary policy action. Meanwhile, downward pressure remains on the risk trade until there is a noteworthy positive shift either fundamentally or psychologically in the risk trade, meaning gold could continue to be under pressure considering its negative correlation with the Dollar.

Technically speaking, we’ve formed some new uptrend lines which run through levels set last week. Additionally, 2/5 lows and the psychological $1050/oz level could serve as technical cushions. As for the topside, gold faces multiple downtrend lines along with the psychological $1075/oz and $1100/oz levels.

Present Price: $1063.95/oz

Resistances: $1066.88/oz, $1068.34/ oz, $1070.77/oz, $1073.95/oz, $1082.19/oz, $1084.11/oz

Supports: $1062.26/oz, $1058.74/oz, $1054.86/oz, $1052.53/oz, $1050.12/oz

Psychological: $1050/oz, $1075/oz, $1100/oz, February highs and lows

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