Comex gold futures rose higher on Friday, due to investment and safe-haven demand after Friday night's UN resolution for a no-fly zone in Libya and the lingering nuclear saga in Japan.

Bullion markets were boosted by news that the G7 group of countries had agreed to sell the yen in response to recent market volatility.

As well, the Bank of Japan agreed to pump an additional ¥3 trillion ($37 billion) to strengthen markets. The broad market uncertainty is set to support investor interest with gold ETP flows turning positive this month.

Silver prices continue to take gold's cue but are likely to remain volatile given their weak fundamentals.

Comex gold futures are moving in line with our expectations. As mentioned in the previous update, unexpected fall below $1,390 could result in a corrective decline.

Support was seen at $1,380 levels from where a good pullback was also noticed. Prices could now consolidate for a while in the coming sessions between $1,400-1,425 levels for some time and build a base for the next move above $1,445 targeting $1,475-95 levels initially.

Supports are now seen at $1,410 followed by $1,400 levels.

Only an unexpected decline below $1,365 could revive bearish hopes again for $1,300 or even lower to $1,250.

We have to revisit the counts once again. This typically happens when markets are either nearing a peak or in a messy correction.

As mentioned earlier, a daily close above $1,395, will hint that a new impulse or an irregular wave “B” could be in the making. Our preference is now towards a beginning a fifth wave targeting $1,495 rather than that of an irregular wave “B” as prices crossed $1,385.

We now see the recent high of $1,435 as the end of a third wave impulse only and a decline to $1,309 as an end of a minor corrective A-B-C decline. The second wave within the fifth wave is probably in progress now.

RSI is still 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 signalling bullishness to be intact.

Therefore, look for gold futures to consolidate and then rise higher subsequently.

Supports are at $1,410, $1,395 and $1,365. Resistances are at $1,445, $1,455 and $1,495.

(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 .)

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