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Comex gold futures ended lower onFriday, on profit-taking a day after a deal to contain the euro zone debt crisis triggered a broad rise in equities and commodities. Investors took profits a day after big rallies in many commodity and equity markets on a long-awaited deal struck by European Union leaders to contain a two-year debt crisis. For the week, the EU debt issue helped gold and other precious metals advance, especially as the dollar dropped on the euro zone debt news. In the coming sessions economic fundamentals will be watched more closely by the markets and gold will stand to benefit due to the news flows.
Comex gold futures rose higher after a long period of consolidation. As mentioned in the previous update, Prices need to rise past $1,695 to get bullish. Supports near $1,633/28 held well in line with our views. Ideally, we can expect gold prices to test a potential target at $1,770-75 levels being an equality target for the current upmove. There is a chance for an extension even towards $1,790/95 levels. Strong resistance can be seen at these levels. While supports in the $1,705-10 zone holds, we can expect a test of above mentioned resistance. Unexpected decline below $1,680 can dent our bullish expectations.
The wave counts have to be revisited again as a possible fifth has ended. Potential targets for the fifth wave have already been met. Prices have gone above $1,900 as an extension of the fifth wave. Fall below $1,600 confirmed that a corrective “A-B-C” has started. RSI is still in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are about to cross over above the zero line of the indicator hinting at a possible bullish reversal and a resumption of bullish trend.
Therefore, look for gold futures to test the supports and then riser higher again.
Supports are at $1,705, $1680 and $1,645. Resistances are at $1,755, $1,775 and $1,790.
(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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