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Gold futures, ended higher Friday on expectations that the dollar will slide as the recession deepens, boosting the appeal of the precious metal as an alternative investment. US job losses last year were the most since 1945, Labour Department data showed on Friday. The Fed has slashed interest rates to near zero. The government has pledged more than $8.5 trillion as of November 25 to bail out financial companies and help the country recover from a recession. The President- elect, Mr Barrack Obama, favours an additional stimulus package and all this smells of inflation going forward, which is bound to benefit gold as an inflationary hedge.

Comex December gold futures are consolidating in a broad range now waiting for direction. Important resistance lies in the $868-71 range now and a daily close above this level should open the upside for a possible test of $925. Important support is at $835-36 zone now, and as long as this level remains undisturbed, there are good chances of this bullishness to remain and prices to rise towards $920-25 levels in the coming sessions. Ideally, we expect a test of $1055 or even higher as long as the important supports hold. Unexpected fall below $833 could trigger weakness and such a fall could take prices lower again towards $810-15 levels. 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 in the process of a beginning of a new fifth wave impulse. 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 rise higher.

Supports are at $845, 836 and 815. Resistances are at $871, 886 and 899.

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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