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Gnanasekar T.

Gold futures rose to match a 25-year high on continued fund buying on expectation of this bull-run to continue. However, gold could come under pressure on profit-taking as it nears the psychological $600 mark an ounce. Continuation of geo-political concerns high oil prices and a weaker dollar, will underpin gold prices in the coming months.

COMEX gold futures broke higher in line with our expectations. Break of the channel at $567-68 triggered a sharp move higher coming close to the psychological $600 mark. In the bigger picture weekly chart, prices have hit a crucial trend line resistance at $594 and corrected lower from there.

As long as prices stay below this level in the coming week, we can expect a corrective dip lower to $578-80 levels. A move below $570 could weaken the bullish structure and hint at a deeper correction. As per our recent wave counts, we believe the current third wave to have ended at $575.

A corrective fourth wave ended at $534. A possible fifth wave impulse has begun targeting $613 initially followed by an equality target at $621. RSI is in the overbought zone indicating that it is overbought and a correction expected in the coming sessions. The averages in MACD have gone above the zero line of the indicator suggesting bullishness. Only a crossover of the averages below the zero line will signal a bearish reversal again. Prices are above the short-term 8 period EMA at $572.30, indicating short-term bullishness followed by the 34 period EMA at $560. Therefore, look for COMEX gold futures to correct lower.

Supports are at $583, 578 and 572. Resistances are at $595, 601 and 613.

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