Gold is trading well off Monday highs as investors exit the risk trade in the wake of more negative fundamental data from around the globe. The selloff began with weaker than expected French Consumer Spending and German Ifo Business Climate data from the EU along with discouraging UK BBA Mortgage Approvals data. Additionally, the U.S. just reported a sizable step back in CB Consumer Confidence. Hence, the fundamental picture is altogether negative today, resulting in sizable pullbacks in the USD/JPY, EUR/USD, and Cable. The negative reaction of the risk trade is dragging gold lower due to its usual negative correlation with the Greenback. It will be interesting to see whether the EUR/USD and Cable can hold above previous February lows and salvage their previous upward momentum, for another setback in the risk trade could weigh on gold due to correlative forces. However, gold is still trading above $1100/oz, which has proven to be an influential psychological zone in the past. The U.S. will release New Home Sales tomorrow in succession with Bernanke’s Congressional testimony. As a result, volatility could increase in the next 24 hours as investors look for further insight from Bernanke in regards to the Fed’s future monetary policy plans.

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: $1106.10/oz

Resistances: $1106.18/oz, $1107.91/oz, $1110.64/ oz, $1113.36/oz, $1116.08/oz, $1118.31/oz

Supports: $1103.46/oz, $1100.74/oz, $1098.51/oz, $1096.04/oz, $1093.81/oz, $1090.84/oz

Psychological: $1100/oz, $1125/oz, February highs

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