Financial Daily from THE HINDU group of publications
Friday, Apr 02, 2004
Financial Daily from THE HINDU group of publications Friday, Apr 02, 2004 |
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Agri-Biz & Commodities
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Technical Analysis Spot gold may head higher Gnanasekar.T
GOLD prices reached 12-week highs on renewed interest in the precious metal amid a tumble in the dollar and increased global security fears. A weaker than expected report on manufacturing activity and a rumour that Federal reserve Chairman, Mr Alan Greenspan, suffered a heart attack which was quickly denied saw gold hitting 12-week highs. A lower dollar makes dollar-denominated metals cheaper to buy for traders holding foreign currencies. A decline in the US consumer confidence, with rising oil prices also saw investors increase their exposure into precious metals. US consumer confidence index fell to 88.3 in March from an upwardly revised 88.5 in February. Jitters about recent bombings and bomb scare overseas, worries of further attacks, and continued violence in Iraq also renewed interest in safe haven commodity gold. More activity in gold is expected as a series of economic data of significance to be released this week. They are, the OPEC meeting on oil production, European Central Bank's interest rate decision and Friday's US Jobs Data. Gold prices are heading higher as per our expectations. As expected support was seen at $417, which was an important resistance level in the past. Resistance will now be the previous high at $430.50 also a fractal point. The long-term channel seen in the chart has seen support at $387-388 levels and the next resistance will be near the $450 level. Long term rising trend line resistance is at $442. Believe this level should be tested soon and can expect good resistance here. With a sharp move last two week's we are quite convinced that the new impulse wave rally has begun and a corrective move A-B-C of the fourth wave we have been discussing in our previous up dates could have got over at $387. We are in the third wave of the impulse wave rally targeting initially $442 and have potential to head further. RSI is in the overbought zone and can expect a minor correction downwards. The averages in MACD, are convincingly above the zero line of the indicator which also adds strength to our bullish view. Prices are higher than the short- term 9-day EMA at $418 and the medium term 25-day EMA is at $411. Look for prices to head higher with possibility of a minor correction ahead. Supports are at $423, 417 and 405. Resistances at $428, 430.50 and 442 respectively.
(The author is with the Multi Commodity Exchange of India. The views expressed in this column are his own and not of his employer. This analysis is based on the historical price movements and there is risk of loss in trading.)
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