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Comex gold futures ended lower on Friday, as crude oil prices tumbled and after a robust US jobs report lowered the chance of a large cut in key interest rates by the Federal Reserve next week. Falling energy prices dent gold’s appeal as a hedge against oil-led inflation. An interest rate cut lowers the cost of borrowing and makes bullion more attractive. The US Government reported that employers added 94,000 jobs in November, a larger-than-expected number. Volatility is expected as we near the end of the year, as the volumes thin and speculative activity increase.

Comex December gold futures is now consolidating in a broad range mostly preparing for the next move up. As seen in the chart above, a bullish consolidation is taking place and a break above $838 would confirm bullishness for a target of $910. Resistances will now be seen at $805 followed by $815. As mentioned in the previous update, the bigger picture supports a bullish market for gold ahead despite a recent fall, and we therefore advise caution on getting excessively bearish. We believe that the third wave could have ended at $732 and the fourth wave consolidation at $665, and the fifth wave in progress. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still above the zero line of the indicator suggesting bullishness to be intact. Only a cross-over below the zero line will indicate bearishness. Therefore, expect gold futures to consolidate and rise higher subsequently.

Supports are at $785, 773 & 765. Resistances are at $805, 815 & 838.

(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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