Gold is holding around Friday's highs despite an incredible selloff in the Cable and considerable weakness in the EUR/USD. Hence, gold is continuing to deviate from its usual positive correlation with the Euro and Pound and is instead performing relative well amid increasing economic uncertainty in Europe. However, the AUD/USD is performing rather well with investors speculating that the RBA may either raise rates tomorrow or keep the benchmark unchanged. Therefore, gold may be deriving its correlative strength from selective sources at the moment. That being said, it wouldn't be surprising to see gold's positive correlation with the Euro and Pound to kick back in over the medium-term despite recent unreliability. Meanwhile, gold is has initially reacted positively to weaker than expected U.S. Manufacturing PMI and pricing data. Disappointing U.S. data gives the economy a relative weakness and benefits the risk trade, hence a slight uptick in gold after the data flow. Market activity will likely pick up as the market progresses, beginning with tomorrow's RBA rate decision during tomorrow's Asia trading session followed by UK HPI and EU CPI data. For the time being, it will be interesting to see if gold can continue to hold above its highly psychological $1100/oz level while February highs wait around the corner.

Technically speaking, gold faces multiple downtrend lines along with 2/17 and 2/22 highs. Our 3rd tier downtrend line could serve as a key near-term technical since it runs through February highs, or the $1130/oz area. As for the downside, gold has multiple uptrend lines serving as technical cushions along with intraday, 2/26, and 2/25 lows. Furthermore, the psychological $1100/oz level could continue to play an influential role over the near-term.

Present Price: $1116.30/oz

Resistances: $1118.92/oz, $1121.35/oz, $1123.30/oz, $1125.97/ oz, $1128.160/oz, $1130.84/oz

Supports: $1115.03/oz, $1112.60/oz, $1110.41/oz, $1108.22/oz, $1106.18/oz, $1103.10/oz

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