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Gold futures ended higher on Friday helped by dollar weakening despite a strong jobs report. The move by gold producer Newmont Mining Corp, to eliminate its entire 1.85 million-ounce gold hedge position was seen as a bullish sign by market participants, as it encouraged other miners also to buy back their hedge positions. Good physical buying too lifted prices from its lows.

Crude oil prices have been on a song due to continued disruptions in Nigeria, which has also provided support for gold at its lows.

COMEX gold futures has been finding good support in the $640 range. It tested supports and rose higher in line with our expectations. We can now expect prices to rise higher towards $662-665 levels as long as $645 caps any downside attempts.

Immediate resistance will be seen at $658 level. We see a possibility of this current rally to extend even towards $668 levels, which could signal a premature end of this correction and then rally to continue higher towards $680 levels.

Only a failure to cross $680 will signal the return of bears. Any possibility of a fall towards $580 levels can be expected only on a move below $634-35 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.

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

Supports are at $648, 645 and 642. Resistances are at $658, 665 and 674.

Gnanasekar T.

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