Comex gold futures pulled back higher on Friday, by a partial US government shutdown that threatens to hurt economic growth, increasing bullion's haven appeal. Markets have been closely monitoring US data on the labour and housing markets to judge the strength of the economy, which could decide when the Federal Reserve will begin cutting back on its bullion-friendly stimulus measures.

However, the metal failed to capitalise on a stronger euro and the US government shutdown in what should have been a good environment for havens so far.

Comex gold futures moved in a broad range, but the bias still continues to be weak. The movement in the coming week could be a sideways one. This could mean that price could stay in a range between $1,345-50 on the upside and $1,275 on the downside before breaking lower towards $1,210 levels.

As mentioned earlier, while $1,365-75 caps upside attempts we expect prices to gradually grind lower to $1,270 which could be the trigger for a fall towards $1,200 or even lower now. Only an unexpected rise above $1,376 could warn about the failure of this bearish expectation as such a rise could turn the picture mildly bullish for $1,405 or even higher to $1,455. Favoured view is still for a decline to lower levels while $1,355-65 caps upside attempts.

The wave counts need to be reviewed once again. A failed fifth wave move at $1,800 resulted in a corrective decline to $1,181 in the form of wave “A”. A possible wave “B” is in progress with targets near $1,420 or even higher to $1,485. This means a wave “C” is expected to follow through which could target $1,150 or even lower. Alternatively, from the peak of $1,920 a corrective decline in the form of “A-B-C” is already over at $1,181 and a new impulse has begun. Confirmation of such an impulse will be seen at $1,535.

With the present move failing near $1,435-40, we will go with wave “B” ending at $1,433 and a possible Wave “C” underway.

RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD are below the zero line of the indicator hinting at a bearish reversal.

Therefore, look for gold futures to consolidate and then head lower again. Supports are at $1,300, 1,270 and 1,210 and Resistances are at $1,335, 1,355 and 1,380.

(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.)

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