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Comex gold ended higher on Friday, as a dollar dropped amid an outline agreement to aid debt-burden Greece boosted risk appetite. Gold accelerated gains after mixed U.S. data point to a wobbly economic recovery. U.S. consumer sentiment worsened more than forecast in June on continued economic pessimism. Gold market participants also focused on development over talks to reach a deficit-cutting agreement among U.S. lawmakers also underpinned gold. The end of a $600-billion U.S. government bond-buying programme, or the second round of quantitative easing dubbed as QE2, this month is also fuelling economic worries.
Comex gold futures are moving in line with our expectations. As mentioned in the previous update, the focus was back on $1510-15 levels again, where support is quite strong. This also happens to be a trend line support point. Near-term support is at $1530-35 levels now. While the support levels hold, we still expect prices to reach for potential trend channel resistance at $1605-10. Structures are turning positive again. Break above $1555 will open the way now for a push higher towards $1575 initially followed by $1605-10 a potential target. However, failure to close above $1,555 could lead to another round of consolidation between $1510-1555.
Our wave counts are now hinting at a final fifth wave to have begun. As we have been maintaining there is a possibility of the fifth wave to continue rising higher above $1577 towards $1600 levels. Therefore, we have modified our previous wave counts of a possible wave “A” which ended at $1505. We will review these counts again if we see a sharp decline again. RSI is the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still above the zero line of the indicator, indicating bullishness to be intact.
Therefore, look for gold futures to test the support levels and rise again.
Supports are at $1,535, $1,510 and $1,465. Resistances are at $1,555, $1,577 and $1,595.
(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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