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Gold futures, ended lower as the dollar strengthened despite weak payroll numbers. The dollar gained against the euro even as reports showed the US unemployment rate rose to a five-year high last month and foreclosures in the second quarter accelerated to the fastest pace in three decades. Gold has declined 22 per cent from a March 17 record of $1,033.90 an ounce. Still, gold may fare better than other commodities even if the dollar extends its gains because of the metal&# 8217;s appeal as a haven from financial turmoil, and inflationary concerns.

Comex December gold futures are still trading in a narrow volatile range. Fall below $812 triggered a fall again and this level will now provide good resistance. We can now expect a test of recent lows at $778 or even lower towards $750 levels. Ideally, $774-75 levels could provide good support being a long-term trend line support point as seen in the chart above.

Only an unexpected rise above $825 now could cause doubts on our bearish view. Such an unexpected rise could target $858-60 levels in the near-term. But big picture indications are still bearish for a test of the recent lows. We believe that the third wave could have ended at $1,033 and the fourth wave that we have been tracking could still be in formation and not ended as expected in the previous update.

The 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 a bearish reversal. Only a cross-over above the zero line of the indicator to signal a bullish reversal again. Therefore, expect gold to consolidate and fall lower.

Supports are at $795, 785 & 774. Resistances are at $812, 826 & 845.

Gnanasekar T.

(The author is the director at Commtrendz Research and 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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