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Gold futures, ended lower on Friday on profit-taking as all other markets fell after the US Senate rejected an automaker bailout package. The White House moved to calm nerves on Friday afternoon, saying it was considering tapping a $700 billion financial industry bailout fund to prevent the collapse of automakers. Support was seen mostly from a weaker dollar boosting the precious metals appeal as a hedge against inflation. However, deflationary expectations are also pressu ring gold prices, on mounting fears of slackening growth and economic weakness. Comex December gold futures pulled back higher. Volatile movements are seen now with no clear trend or bias. Prices are trapped in a very broad range between $770-833 levels. Break above $833 to lead prices higher towards $865 or $873 on the upside, while an unexpected decline below $770 could take prices towards $720 or even lower. Favoured view expects a test of $873 or even higher as long as $801 holds attempts to decline. 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 earlier updates. The RSI is in the neutral zone, indicating that it is neither overbought nor oversold. The averages in MACD are above the zero line of the indicator again, suggesting a possible bullish reversal. Only a cross-over below the zero line of the indicator could signal bearishness. Therefore, expect gold futures to consolidate and test the resistance levels.

Supports are at $810, 801 & 789. Resistances are at $833, 854 & 865.

Gnanasekaar 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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