Comex gold futures ended lower on Friday on profit-taking after bullion's appeal as an inflation hedge was dampened by a surprising drop in US unemployment rate to a four-year low.

The US data showed the world's largest economy was not heading back into a recession, and had encouraged investors to take on riskier bets.

Gold futures also are facing pressure from investor disappointment, as prices have failed to set fresh record highs in the wake of the Fed's QE3.

Money managers boosted their Comex gold and silver holdings in the week ended Oct. 2, according to data released Friday by the Commodity Futures Trading Commission.

Comex gold futures are moving in line with our expectations.

As mentioned in the previous update, the rally could resume higher towards $1,795-1,805 levels.

Bigger picture looks set for rally to $1,900 levels in the medium-term and in the long-term close to $2,245-2,300.

In the short-term, while $1,765 holds, a move to $1,805-10 levels looks likely in the coming sessions.

However, a fall below $1,755 could result in a sharp corrective dip to $1,700 levels on the downside or even lower to $1,675.

Subsequent to this corrective decline, the upward march could resume and test potential targets above $1,900 levels.

Unexpected decline below $1,670 could postpone the bullishness.

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 1,535 and a wave “B” ended at 1,804.

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

A new impulse has begun with a potential to test $2,025-30 levels.

A confirmation of the same will be seen on a close above $1,785.

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

It is also showing a negative divergence where prices are making a higher high, not confirmed by the same in the indicator.

The averages in MACD are still above the zero line of the indicator hinting at bullishness to be intact.

Therefore, look for gold futures to correct lower.

Supports are at $1,765, $1,745 and $1,720 and Resistances are at $1,795, $1,810 and $1,845.

(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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