Comex gold futures edged higher on Friday after US employers added fewer jobs than forecast, boosting prospects for the Federal Reserve to use additional stimulus measures to spur growth.

Investors covered short positions after a sharp two-day pullback, and a crude oil rally also buoyed the precious metal that sank early this week on disappointment about further US monetary easing.

Markets have reduced gold holdings due to stronger US economic data and easing of fears about European debt.

The metal had dropped 3.5 per cent in the previous two sessions as the market had largely factored in QE3 after the US central bank in January said it would keep rates near zero until 2014.

Comex gold futures are still consolidating in a very broad range building itself for the next move.

Prices fell lower against our expectations.

As mentioned in the previous update, prices could move towards resistances at $1,675 followed by $1,695 levels.

Though prices rose higher towards expected levels a drop below $1,640 opened the downside again.

While below $1,640-45 levels chances exist for a decline below psychological support at $1,600. Chances exist for a decline towards $1,555-60 levels too in the coming sessions.

Only a direct rise above $1,685 could hint a possible early recovery towards $1,700 levels or even higher which we do not favour presently.

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.

It is possible that Wave “A” ended at 1535 and a wave “B” ended at $1,804.

A possible wave “C” has possibly ended at $1,523.

With the current price move going to $1,627, fell a broad corrective rally is still underway.

We will review the counts once we see an impulse move either way.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold.

The averages in MACD are below the zero line of the indicator hinting at bearishness to be intact.

Therefore, look for gold futures to test the resistance levels.

Resistances are at $1,645, $1,685 and $1,710 and supports are at $1,620, $1,600 and $1,565.

(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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