Comex gold futures ended marginally lower on Friday, as an encouraging US jobs report boosted the dollar. Positive non-farm payrolls and manufacturing data confirmed a strengthening US economy. However, quarter-end buying, euro zone debt worries and unrest in the West Asia lifted bullion off lows. Though the Fed is not expected to tighten monetary policy in the short term, recent hawkish comments by top Fed officials are weighing on bullion investor sentiment. Gold tends to suffer when rates climb, as the opportunity cost of holding non-yielding assets increases. In the first quarter, the price climbed 1.3 per cent, marking the 10th straight gain, the longest rally since at least 1975. The metal has advanced 27 per cent in the past 12 months.

Comex gold futures are consolidating in a range. As mentioned in the previous update, we saw a decline towards $1,410-15 levels initially. We expect the rally to continue higher towards $1,465-75 levels again or even higher towards $1,495-1,500 levels. Only an unexpected fall below $1,405 could result in a corrective decline targeting $1,365 levels initially. Resistance is now seen at $1,435 followed by $1,445 levels now. Fall below $1,375, being a near-term trend-line support as seen in the chart above 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. RSI is still in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have crossed above the zero line of the indicator signalling a bullish reversal.

Therefore, look for gold futures to test the supports and then rise higher subsequently. Supports are at $1,410, $1,395 and $1,365. Resistances are at $1,435, $1,455 and $1,475.

(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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