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Gnanasekar. T

Gold futures ended sharply higher on Friday, as a rebound in oil prices brought back investors in gold. Inflows from the equities side related to interest in gold exchange traded funds also added to the positive sentiment.

Gold's rally defied a rally in the dollar, which made bullion more expensive for non-dollar investors. Though the economic data suggested dollar weakness, market participants discounted anything against the dollar and instead tried to pick some bright spots. Physical buying from India has been robust too underpinning prices.

COMEX gold futures rallied higher after consolidating near the support points. Break above $585 triggered stops and rallied higher with near-term resistance seen at $598 followed by $611 levels. However, if resistance continues to be strong above $600 levels, it will hint at another round of consolidation in the $585-595 levels before rising higher above the trend line resistance point at $615.

Below $573, gold futures could weaken again targeting $550 levels. Since we notice positive divergence in the indicators, we believe any dips to $580-85 to be well supported for a test of the trend line resistance at $615. We believe that the third wave could have ended at $732 and the corrective fourth wave still in motion.

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. Only a crossover of the averages above the zero line will signal a bullish reversal. Prices are above the short-term 8 period EMA at $583 followed by the 34 period EMA at $598. Therefore, look for COMEX gold to test the resistance levels.

Supports are at $585, 578 and 560. Resistances are at $598, 605 and 615.

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