Comex gold futures ended neutral on Friday after prices whipsawed back above $1,300 after the US gained fewer jobs than expected in June. It added 162,000 jobs in June, missing expectations of 184,000. Still, the unemployment rate slipped to 7.4 per cent, slightly better than the forecast of 7.5 per cent.

Gold prices often gain after weak data readings because the Fed has linked interest rates to labour market targets. The national non-farm unemployment rate will have to drop to 6.5 per cent before the Fed moves rates up from the current exceptionally low level of 0-0.25 per cent. The Fed has said its policy remains driven by data, but it gave no signs in a statement on Wednesday that it was set to wind down its monthly bond-buying measures, but gold prices did not capitalise on this and on the contrary fell lower before the payroll data.

Comex gold futures moved in a choppy manner. Price structures indicate a possible intermediate bottom in place. But, failure to follow-through higher indicates overall weakness to be intact. Strong resistance will be seen at $1,335-40 level. A break and close above this level should open the way for next resistance at $1,365-75 levels. Move above here could hint at further strength for $1,423-25 levels in the coming weeks.

Unexpected decline below $1,265 could dent the bullish picture and such a fall could revive bearish momentum for a decline below recent lows. Favoured view expects prices to edge higher towards resistance mentioned above while $1,265 holds.

The wave counts need to be 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 $1,155. There is a possibility that wave “C” has ended at the recent low at $1,180.

RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD have gone above the zero line of the indicator hinting at a possible bullish reversal.

Therefore, look for gold futures to consolidate and rise again.

Supports are at $1,300, 1,285 and 1,265 and Resistances are at $1,335, 1,375 and 1,425.

(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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