The Hindu Business Line : Gold may test support level

Gold futures ended lower on Friday, as the dollar strengthened and crude oil prices were on their way down. Economic data from the US also suggested that economy could be on track again. Lower unemployment rate and a narrowing US trade-deficit eased fears of a sharp economic slowdown.

Unless, there are any geo-political concerns, gold futures are unlikely to hold on to the gains going forward.

COMEX gold futures bounced higher, but are unable to follow-through, a sign of weakness. Immediate support will be seen at $635 followed by crucial support at $623 a 200-day EMA point.

There are other technical indications, which have started showing bearish signs. As long as $663-65 caps the up side, we can now expect prices to edge lower in coming sessions towards $630 or even lower.

In the bigger picture though, it is still within a broad consolidation preparing itself for a bigger move on the up side.

We believe that the third wave could have ended at $732 and the recent fall has once again created doubts on whether a fifth wave impulse has begun or not. Then we could still be in a messy fourth wave move.

RSI is in the neutral zone indicating that it is neither overbought nor oversold.

The averages in MACD are on the verge of going below the zero line of the indicator suggesting a bearish trend to set in. Prices are below the short-term 8-day period EMA at $656 followed by the 34-day period EMA at $658. Therefore, expect gold to test the support levels. Supports are at $645, 635 and 623. Resistances are at $658, 665 and 668.

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