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Gnanasekar. T

Gold futures ended marginally higher on Friday, after falling to weekly lows mainly on declining energy and base metal prices. With the stock markets performing well, there was possibility of re-allocation of funds from commodities into equities, which could have contributed to the fall in gold prices.

Underlying fundamentals still favour a rally in gold prices. Dollar looks vulnerable for a fall, which will support gold prices. Crude oil futures will, however, continue to weigh on gold prices and therefore chances of a sharp rise in prices look unlikely.

COMEX gold futures corrected lower against our expectations. Any corrective dips should find good support at $614-615. Gold futures will now consolidate in the $613-15 and $628-630 range before we see the next move happen. And as long as $611 remains undisturbed, we can expect prices to test $648-50 levels in the coming week.

However, failure to surpass $630, and a fall below $611 will prove that the current rise to $638 as a trap, and has the potential to fall to $603-05 levels subsequently. We believe that the third wave could have ended at $732 and the corrective fourth wave still in motion. Break above $678 will signal the beginning of the fifth wave move.

RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are above the zero line of the indicator suggesting a bullish reversal. Only a crossover of the averages below the zero line will signal bearishness again. Prices are below the short-term 8-day period EMA at $624 followed by the 34-day period EMA at $612. Therefore, look for COMEX gold to consolidate and then rise higher.

Supports are at $615, 611 and 607. Resistances are at $625, 631 and 645.

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