The Hindu Business Line : Gold seen testing resistance, dipping

Gold futures ended marginally higher on Friday, in thin market conditions shortened by a long holiday weekend. Markets are pricing in a possible interest rate cut in the US as the macro economic data released so far suggest sagging, soft and hard landing growth scenario. A weaker dollar helps dollar-denominated gold prices in the overseas markets. However, many investment and index based funds who have taken big hits in 2006 on the back of falling energy prices, would adopt a cautious approach in the first quarter of 2007.

COMEX gold futures are lower in line with our expectations. Good support has been seen at $615 levels. The coming week would be thin, and sometimes notice exaggerated moves. As long as prices stay below $633, expect gold futures to edge lower towards $610 or even lower in the coming weeks. Support is expected now at $610-611 levels followed by crucial support at $601.50 levels. Fall below $601 will have the potential to extend lower till $576-78 levels being the long-term rising trend line support point as seen in the chart above.

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 have gone below the zero line of the indicator suggesting a bearish reversal.

Prices are below the short-term 8-day period EMA at $625 followed by the 34-day period EMA at $627. Therefore, look for Comex gold to test the test the resistance levels and fall lower.

Supports are at $618, $615 and $610. Resistances are at $625, $628 & 633.

(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 atgnanasekar_thiagarajan@yahoo.com.)

More Stories on : Technical Analysis | Gold & Silver

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Designer rice varieties must reach farmers'

Crop rotation plan mooted for Kuttanadu

Need to validate seed testing labs: Rasi Seeds MD

Flower show begins in Mangalore

Potato futures fall on rise in arrivals

Good demand for teas in North India

Replantation: Tea body for continuing subsidy scheme

Gold seen testing resistance, dipping

Palm oil futures may head higher

AP wants new IIT to offer agri engg

TN farmers' plea to raise milk procurement rate

TN sets up panel for agriculture development

`TN agri commodities enjoy potential in SE Asia'

Cumin seed exports may cross 25,000 t

Gold may remain muted in short term