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Gold futures ended higher on Friday, owing to a weakening dollar and the unresolved row between Iran and Britain. Though the uncertain conditions in West Asia prompted a sharp rise in crude oil prices, the reaction in gold was relatively muted.

This could possibly be due to the quarter-end, where profit-booking and window dressing by funds capped gains.

The dollar declined after the US Government said it would impose duties on imports of coated paper from China, which could potentially result in a trade war with China.

COMEX gold futures moved in line with our expectations testing important supports and rising higher from there.

Gold futures should see a consolidation between $658-60 levels to $673-75 levels in the coming week. Ideal scenario, would be to expect a break of this range targeting $685 initially or even higher to the recent high of $692.

Fall below $657 would cause doubts about this bullish expectation.

In the bigger picture, prices are still consolidating preparing itself for a big move higher. 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.

In this case, 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 have gone above the zero line of the indicator suggesting a bullish reversal. Prices are above the short-term 8 period EMA at $667 followed by the 34 period EMA at $662. Therefore, expect gold to consolidate and rise higher.

Supports are at $662, 658 and 652. Resistances are at $674, 685 and 692.

(The author is a director at 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 at gnanasekar_thiagarajan@yahoo.com.)

Gnanasekar.T

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