The Hindu Business Line : Gold may test resistance levels

GOLD prices firmed up during the close due to the influence of higher oil prices. More data is expected on the US economy in the coming month. Going forward from here, markets will closely watch the economic data for sluggishness to continue which in turn would force Fed to take a breather for its measured course of tightening.

As expected, the central bank raised the target for the federal funds rate on overnight lending between banks a quarter percentage point to 1.75 per cent. The Fed said the upside and downside risks to growth and price stability were almost equal.

Higher oil prices have also benefited gold as it is considered an inflation-hedge.

Gold prices moved higher and have broken some of the key resistance levels. As mentioned earlier, a daily close above $408 will see prices headed towards the $420 levels. Next important resistance is at $411-412, which is also the fractal top point. Support will be at $403-05 in the near term.

As prices are locked in this range, any clear direction will emerge on the break the above-mentioned support and resistance points. We need to alter some of our wave counts internally; however, the bigger picture still remains unchanged.

As per our recent count we are in a correction in the bigger picture after the fifth wave failed at $433 unable to cross the third wave top at $431.50 convincingly. A corrective wave "a" began from there and ended at $371. This was followed by a wave "b", which now looks to have topped out at $414.

A wave "c" has possibly begun from there targeting $365 levels. This will be confirmed after a break of $392. 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. Only a crossover of the averages below the zero line in the indicator will signal a bearish reversal.

Prices are below the short-term 9-day EMA at $405.66 and the medium term 25-day EMA is at $403.95. Therefore, look for prices to test the resistance levels. Supports are at $403, 400 and 397. Resistances at $ 408, 410 & 412 respectively.

(The author is associated with the Multi Commodity Exchange of India Ltd. The views expressed in this column are his own and not that of his employer. 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.)

More Stories on : Technical Analysis | Gold & Silver

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
FMC plans uniform working system for commodity bourses

`Poor irrigation facilities affecting farm sector'

Cheap 'N' Juicy

Spot rubber up on purchases

Rubber plantation strike called off

Gold may test resistance levels

Fall in groundnut oil prices dampens export optimism

Cashew export body seeks aid for activities abroad

Cardamom slide continues

Higher quotes hit guar gum powder exports — Processors blame futures exchanges for high prices