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Gnanasekar T.

Gold futures ended marginally higher on Friday helped by firm crude oil prices, softer dollar and news that North Korea fired some short-range rockets triggering some safe-haven buying, before a three day week-end in the US.

Heavy gold sales by European central banks in the past months have taken a toll on bullion sentiment.

Data from ECB showed that gold and gold receivables held by euro-zone central banks fell by an astounding 1.46 billion since the beginning of April. Fundamentals, still favour bullishness with flat to lower output in the mining side and steadily rising demand.

COMEX gold futures ended lower in line with our expectations. Immediate resistance is at $658 followed by $665 levels in the coming week.

Crucial support is near the $645 in the coming sessions, being a rising trend line support point.

As mentioned in the previous update, the overall bullish price structure could weaken below $634-35 levels and such a fall could lead prices back towards $555 levels.

However, it is too early to jump to such conclusions. In the big picture, we now feel $634-45 levels to hold once again for a rally towards $700 or even higher.

We believe that the third wave could have ended at $732 and the current move being a fourth wave consolidation and the beginning of a fifth wave impulse will be confirmed above $698.

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 bearishness.

Prices are below the short-term 8-day period EMA at $661 indicating bearishness followed by the 21-day period EMA at $668.

Therefore, expect gold futures to test the resistance levels and fall lower subsequently.

Supports are at $650, 645 and 634.

Resistances are at $658, 663 and 674.

(The author is the Director of Commtrendz Research and also 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.)

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