The Hindu Business Line : Gold may test resistance

Gold futures ended higher on Friday as crude oil prices surged higher and base metals regained their strength. Economic data released during the week suggest that the Fed may hold interest rates steady for some more time. US economic growth in the first quarter was the weakest in more than four years as businesses sold off inventories and Americans imported more foreign goods, the Commerce Department said in Thursday's GDP report. Strong demand implications of healthy US manufacturing data also bolstered industrial metals, including silver.

COMEX gold futures moved higher as expected. The current momentum can take gold futures towards $682-83 levels. Good resistance will be seen here and only a daily close above $690 will rekindle bullish expectations for a test of $700 or even higher.

There is a strong trend line resistance at $689-90 levels and feel it could be a crucial level to surpass. Failure to cross this level will lead to lower prices again. Support will now be seen at $672 followed by $665 levels for the week. As mentioned earlier, the overall bullish price structure could weaken below $634-35 levels and such a fall could lead prices back towards $555 levels.

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 are still below the zero line of the indicator suggesting bearishness.

Prices are above the short-term 8-day period EMA at $667 indicating short-term strength followed by the 21-day period EMA at $673. Therefore, expect gold futures to test the resistance levels.

Supports are at $672, 665 and 658. Resistances are at $682, 689 and 695.

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