The Hindu Business Line : COMEX gold may rise higher

Gold futures ended higher on Friday due to a weaker dollar and weekend short covering. The dollar fell on the US data showing second-quarter economic growth slowed abruptly. The news raised expectations that the Federal Reserve might halt its two-year-old campaign of dollar-boosting interest-rate rises, which usually act to depress gold.

The physical market though is not showing enough buoyancy ahead of the festival season due to high prices. This being one of the major reasons for the recent negative bias apart from thin summer participation by market participants overseas.

COMEX gold futures rose higher in line with our expectations. Good resistance is seen at $641-45 levels and only if the resistance at $648 is taken out, a clear bullish signal would be triggered. We favour bullishness to continue in the coming week, however, a daily close below $618 will hint at a deeper correction towards $595-98 levels.

We believe that the third wave could have ended at $732 and the corrective fourth wave possibly ended at $546. The current impulse shows signs of fifth wave in progress. It could also become an irregular wave "B" if prices fail to go above $680 and subsequently dip below $594, which we do not favour.

RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are still above the zero line of the indicator suggesting bullishness to be intact. Prices are above the short-term 8 period EMA at $630 indicating short-term bullishness followed by the 34 period EMA at $626. Therefore, look for COMEX gold to rise higher steadily.

Supports are at $621, 614 and 598. Resistances are at 638, 645 and 665.

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