The Hindu Business Line : Upward tweak likely in gold

Gold futures closed at a three-month low due to weaker oil prices and a stronger dollar. Sentiment continues to be weak due to moves in energy and currency markets. The dollar gained against European currencies ahead of a weekend G7 meeting, shrugging off benign US inflation data.

Oil continued to slide on high stockpiles and supplies ahead of the crucial winter season. With the FOMC meeting slated next week gold could come under pressure on expectations of rate hikes and the accompanying statements.

COMEX gold futures fell lower in line with our expectations. As expected prices bounced from $575 levels being an important long-term trend line support point. Resistance will be strong at $603-605 levels and the corrective pullback can extend to $615 levels.

Support will now be good at $578-80 levels and a unexpected break below $578 will take prices to $570 or even lower to $550 levels which we do not favour.

We believe that the third wave could have ended at $732 and the corrective fourth wave possibly ended at $546. Currently we could be in a corrective move within the fifth wave.

It could also become an irregular wave "B" if prices fail to go above $680 and subsequently dip below $575.

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 crossover of the averages above the zero line will signal a bullish reversal.

Prices are below the short-term 8 period EMA at $601 indicating short-term bearishness followed by the 34 period EMA at $623. Therefore, look for COMEX gold correct higher in the coming week.

Supports are at $578, 570 and 551. Resistances are at $603, 615 and 623.

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