Comex gold futures ended higher on Friday, after a mildly positive US employment report increased expectations that the Federal Reserve will begin tapering its quantitative easing programme before year-end.

The US added 1,75,000 jobs in May, beating the expectations of a 1,67,000 gain; however, the unemployment rate did rise to 7.6 per cent from 7.5 per cent and the April figure was revised down to 1,49,000 from 1,65,000.

In recent weeks, several Fed policymakers indicated that it might soon be time to slow the pace of its third QE programme.

The central bank is currently committed to purchasing $85 billion in new debt a month indefinitely and its accommodative measures are supportive of gold.

Fears of slowing demand in India could affect prices sentimentally.

India is trying to curb gold imports to reduce its current account deficit.

The world’s biggest bullion consumer announced another hike in its import duty for gold, prompting a slowdown in physical demand.

Comex gold futures moved as expected.

As mentioned the previous update, prices could not sustain beyond $1,421.

The decline from there shows weakness and bearish tendencies.

We have to reconsider our theory of a possible intermediate bottom at $1,321.

An inclination to fall towards $1,355-1,345 area is seen in the coming week.

Resistance near $1,395-1,400 could cap upticks.

It has to cross above $1,420 to give up this bearish expectation as such a move could take it back into the earlier consolidation band or extend higher to $1,440-50 being a stronger resistance.

Fall below $1,365 could accelerate the decline further towards $1,320 or even lower to $1,285 levels.

The wave counts need to reviewed once again.

As mentioned earlier, a possible corrective wave “C” has ended at $1,523 and a possible new impulse has begun with a potential to test $2,025-30 levels in the form of a fifth wave move.

However, a move below $1,690 has increased the possibility that the broad corrective consolidation is in progress now and the impulse has been converted to a corrective move in the form of a wave “C”.

Wave “A” begun from $1,920, and ended at $1,527.

Wave “B” begun from $1,527 and ended at $1,798.

Wave “C” has begun from there. Projected targeted for the wave “C” is at now at $1,265-1,300.

RSI is in the still 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 decline further.

Supports are at $1,365, $1,345 and $1,310 and resistances are at $1,398, $1,420 and $1,445.

(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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