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Gnanasekar T.

Gold futures ended higher on Friday on investment buying ahead of a weekend, mainly on geo-political concerns. Oil climbed above $61 to its highest level this year on the Iran situation and after the United States, the top fuel consumer, reported an unexpected drop in gasoline stocks. Global gold ETF's are also contributing to investment related demand for gold.

COMEX gold futures moved perfectly in line with our expectations.

After the initial resistances were removed and a direct rise above $682 has signalled strength and can now expect the recent highs at $725 to be tested again. However, a near-term resistance is at $692-95, before the psychological resistance at $700 is tested.

Crucial support will be seen at $677-78 levels followed by a very important support at $670, below which the picture could turn neutral. We believe that the third wave could have ended at $ 732 and with the way prices have moved higher, we feel the fifth wave is in motion with no specific targets.

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 suggesting a bullish reversal.

Prices are above the short-term 8-day period EMA at $676 followed by the 34-day period EMA at $652. Therefore, expect gold to consolidate and rise higher.

Supports are at $678, $674 and $670. Resistances are at $695, $702 and $730.

(The author is the director of Commtrendz Research and 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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