Comex gold futures ended higher on Friday, after the release of US non-farm payroll data that came in slightly lower than expectations, while the country’s unemployment rate ticked slightly higher. Gold prices often rises after the unemployment rate moves higher because the US Federal Reserve has linked interest rates to economic targets.
Comex gold futures pulled back higher after testing support levels. As mentioned in the earlier week, initial support is at $1,645-50 levels and prices could bounce higher. Price structures favour an upside now towards the trend line resistance levels at $1,690-95. Once it clears the resistance and closes above $1,698 further extension to $1,725-30 looks likely now. However, failure to hold support at $1,645 could further take it lower towards crucial support at $1,625. Below here a decline to $1,565-75 levels looks likely. In the bigger 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.
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. 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. 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.
Therefore, look for gold futures to rise and test resistance levels. Supports are at $1,645, 1,625 and 1,575 and Resistances are at $1,675, 1,695 and 1,725.
(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.)