Business Daily from THE HINDU group of publications
Monday, Jun 19, 2006
Business Daily from THE HINDU group of publications Monday, Jun 19, 2006 |
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Agri-Biz & Commodities
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Technical Analysis Gold may test resistance, fall
A firmer dollar and the uncertainty surrounding interest rates capped further gains. Gold is often viewed as an alternative investment to dollar and a hedge against inflation. The key now is inflation and the effect it will have on precious metals, and precious metals remains vulnerable in the short-term due to deterioration of sentiment towards global asset classes. With the uncertainty on interest rates beginning to shape up, it will be difficult for gold to regain its glamour and shine well in the coming months unless global tensions resurface again.
COMEX gold futures sunk lower testing a crucial support near $550 and then bouncing higher from there. Though the current momentum can take it to $600 or even slightly higher, it looks highly unlikely for it to cross $625-30 levels in the near-term. Only a daily close above $655 will be a positive sign signalling that the genuine buyers have re-surfaced. Therefore, we see the current bounce back to be a shallow correction and not a reversal in trend. We still believe that the third wave could have ended at $732 and the corrective fourth wave in progress. Currently we could be in a wave "A" correction. The beginning of the fifth wave can be confirmed after a move above $688. RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are below the zero line of the indicator suggesting bearishness. Only a cross-over of the averages above the zero line next will signal a bullish reversal again. Prices are below the short-term 8 period EMA at $592 followed by the 34 period EMA at $627. Therefore, look for COMEX gold futures to test the resistance levels and then fall lower again. Supports are at $575, 564 and 545. Resistances are at $595, 603 and 627.
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