The Hindu Business Line : Comex gold: Bullishness to stay intact

Gold futures ended marginally higher on Friday based on a broadly weaker dollar. Easing inflationary worries put a dampener, thereby, weakening investment demand. Both the CPI and the PPI numbers that came out last week, showed that there wasn’t a big concern about inflation. Also, the recent encouraging US data had hampered gold’s rise, as the danger of fresh crises in financial markets appeared less imminent.

China’s central bank renewed its call on Friday for the creation of a super-sovereign reserve currency to reduce the dollar’s global domination adding strong support to gold prices. Comex August gold futures tested the supports and rose higher according to our expectations.

As mentioned in the previous update, we still view the price structures to be positive as long as $913-15 remains undisturbed. Important near-term support is at $923 now. Direct fall below this level could dampen our bullish expectations. And such a fall has the potential to drag prices even lower towards $865 levels again.

Our favoured view remains a push to the upside as long as $913-15 holds attempts to decline. We believe that the third wave could have ended at $1,033 and the fourth wave that we have been tracking could have ended at $681 and fifth wave impulse in progress. A daily close above $1,000 is a confirmation of the same.

The RSI is in the neutral zone now, indicating that it is neither overbought nor oversold. The averages in MACD are above the zero line of the indicator again, suggesting bullishness to be intact.

Only a cross-over below the zero line of the indicator could signal bearishness again.

Therefore, expect gold futures to consolidate and rise higher again. Supports are at $933, 923 & 915. Resistances are at $948, 957 & 978.

Gnanasekaar 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.)