Gnanasekaar T

Comex gold to test supports, rise

Gnanasekaar T | Updated on March 24, 2013 Published on March 24, 2013

gold1.jpg



Comex gold futures ended higher on Friday, as market participants took profits a day after the precious metal hit a one-month high, and safe-haven buying dried up, as a possible deal by Cyprus eased fears of an escalating euro zone debt crisis.

Cyprus is scrambling to avoid a meltdown of its banking system and a possible exit from the euro, facing a deadline from the European Union of Monday to raise €5.8 billion to secure a €10 billion ($13 billion) international lifeline.

Gold’s 12-year bull run has benefited in the last three years from the euro zone crisis. It culminated to a record high of $1,920 an ounce in September 2011 as fears about Greece’s debt problems boosted bullion prices while equities plunged.

Also underpinning prices was a warning by Fitch Ratings that Britain could lose its AAA rating, citing high government debt levels and weak growth.

Comex gold futures are moving higher in line with our expectations.

As mentioned in the previous update, a direct rise above $1,601 could see prices bouncing back higher again. Such a move could find resistance at $1,625 followed by $1,640-45.

In the bigger and long-term picture prices are still in a broad consolidation after reaching all-time highs at $1,920. There is very good chance of prices testing $2,200-2,300 in 2013 while $1,520-25 remains undisturbed on the downside.

In the coming week, we expect prices to find support in the $1,595-98 range and move higher towards $1,625 or even higher to $1,645. However, a fall below $1,574 could revive bearish expectations of a test of $1,525 or even lower. Favoured view expects prices to find support near the levels mentioned above and bounce higher from there.

The wave counts are gradually hinting that a new impulse is in the offing. A possible corrective wave “C” has possibly ended at $1,523. As mentioned earlier update a corrective move in the form of wave A-B-C could have ended at $1,523. A new impulse has begun with a potential to test $2,025-30 levels in the form of a fifth wave move.

A perfect confirmation of the same will be seen on a close above $1,785. However, a move below $1,690 has increased the possibility that the broad corrective consolidation in form of an “A-B-C-D-E” is in progress now. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator hinting at bearishness to be intact.

Therefore, look for gold futures to test the supports and rise again.

Supports are at $1,598, $1,574 & $1,525 and resistances are at $1,625, $1,645 & $1,695.

(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.t@gmail.com.)

Published on March 24, 2013

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.