The Hindu Business Line : Comex gold may rise

Gold futures ended higher on Friday, after taking cues from the currency markets. Gold has been very closely following energy prices for direction lately, and ignored dollar due to lack of clear direction there. However, important economic indicators released till now goes to indicate that Federal Reserve is less likely to raise rates again and might lean toward easing in 2007. The US Commerce Department's advance reading of third-quarter gross domestic product showed a 1.6 per cent growth rate, below market expectations once again confirming dollar weakness.

COMEX gold futures rose higher in line with our expectations. Support was seen at $576 and did not go as low as $568 as anticipated in the previous update.

There are many positive indications for prices to rise higher. A daily and a weekly close above $600 is a positive sign, a bullish inverted head and shoulder pattern, followed by a possible triangle pattern breakout.

However, it is better to wait till the pattern to break rather than jumping into conclusions right away.

Trend line resistance at $609-10 levels will be strong. 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-day period EMA at $595 followed by the 34-day period EMA at $597.

Therefore, look for Comex gold to rise higher. Supports are at 595, 587 & 578. Resistances are at 608, 615 & 627.

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