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Gold futures ended marginally lower on Friday coming off its highs on profit-taking in thin-volumes and choppy conditions. Gold fell sharply in early trading in a bout of profit taking, shortly after it hit a one-month high when the dollar tumbled on softer-than-forecast US jobs data.

The slower than expected jobs growth in June suggested the Federal Reserve may need to raise rates at a slower pace than previously thought. Though the North Korean situation provided underpinning for gold, investors were not inspire to add to their holdings. COMEX gold futures moved higher in line with our expectations. Good resistance is seen at $638/40 levels presently. The speed at which prices came off from its highs at $639 makes us believe that a sideways correction or a move lower to $618/20 looks likely for the week. Failure to hold support there could even see it extending lower to $612 levels or even lower towards $605.

Only a daily close below $597 will hint at bearishness again. We still believe that the third wave could have ended at $732 and the corrective fourth wave in progress. Currently we could be in a wave "B" correction after Wave "A" ended at $545. The beginning of the fifth wave can be confirmed after a move above $688.

RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator suggesting bearishness to be intact despite recent strength in prices. Only a crossover of the averages above the zero line next will signal a bullish reversal again.

Prices are above the short-term 8-day period EMA at $617 indicating short-term bullishness followed by the 34-day period EMA at $615. Therefore, look for COMEX gold futures to correct lower.

Supports are at $623, 617 and 605. Resistances are at $635, 645 and 658.

(The author is the director of Commtrendz Research and in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

Gnanasekar. T

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