The Hindu Business Line : Gold to test resistance levels

Comex gold futures rallied sharply higher as the dollar slumped against the euro. Oil soared to a record high and equity markets floundered on renewed fears over the scope of the credit crisis. The precious metal extended gains as the dollar slid to 2-1/2-month lows against the euro. The dollar weakened sharply against the euro on new fears over the health of the financial markets.

Comex August gold futures tested the resistance levels as expected. In the previous update, supports held well for a break above $950. It has finally risen above the $950 level, indicating a possible resumption of the bullish trend. Immediate resistance is at $978 followed by $995 subsequently. Dips should now find supports at $945-50, and as long as $933-35 remains intact, a test of the four-figure-mark again is imminent. We believe that the third wave could have ended at $1,033 and the fourth wave that we have been tracking could have ended. We could now be in a potential fifth-wave impulse. A close above $978 would confirm this view. However, an unexpected fall below $915 could cast doubts about this wave count. The 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. Therefore, expect gold to test the resistance levels.

Supports are at $950, 935 & 915. Resistances are at $978, 995 & 1033.

Gnanasekar T.

(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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