Gold is continuing its consolidative pattern despite wild fluctuations in the FX market. The Combination of the Fed’s monetary policy decision, weak housing and unemployment data, and Obama’s State of the Union have provided more than enough data and news to move markets. While New Home Sales drove the Dollar higher, negative New Home Sales data sent the risk trading reeling only to be boosting back up by the Fed maintaining its loose monetary policy. Furthermore, Obama’s speech garnered a positive reaction from equities and helped send the risk trade higher once again. However, disappointing Unemployment Claims data has led investors back to safety. The FX markets have been all over the map to say the least. Gold has remained relatively calm amidst the volatility and it seems the precious metal is waiting for a more definitive directional commitment from the Dollar before settling upon a direction itself. Meanwhile, Congress may vote upon Bernanke’s confirmation today and investors are eagerly awaiting tomorrow’s U.S. Advance GDP data. Hence, FX markets should remain volatile throughout the remainder of the week and it will be interesting to see whether gold decides to participate. That being said, FX investors should keep an eye on gold and monitor the precious metal for a direction breakout for it could signal a similar movement in the Dollar.
Technically speaking, gold has our 1st tier uptrend line serving as a technical cushion along with January lows should they be tested. As for the topside, gold faces a few steep downtrend lines along with the highly psychological $1100/oz level. Furthermore, intraday and 1/26 highs could serve as technical barriers should they be reached.
Present Price: $1088.30/oz
Resistances: $1087.56/oz, $1085.32/oz, $1082.10/oz, $1078.92/oz, $1074.44/oz, $1070.65/oz
Supports: $1093.32/oz, $1096.91/oz, $1101.00/oz, $1103.49/oz, $1106.76/oz, $1109.96/oz
Psychological: $1075/oz, $1100/oz, January lows
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