Comex gold futures ended sharply higher on Friday, in abbreviated sessions after the Thursday’s Thanksgiving holiday. Thin trading conditions amid Thanksgiving holiday celebrations in the US have exaggerated the move higher. For the week, gold gained 2.3 per cent after losing one per cent earlier last week.
Gold also benefited from easing concerns about the euro zone, with investors looking to move into less-liquid assets such as gold rather than the dollar.
Comex gold futures are higher perfectly in line with our expectations. As mentioned in the previous update, the rally could resume higher towards the initial resistance at $1,760-65 levels.
Once this resistance is cleared, then prices could aim for the important psychological resistance at $1,795-1,800 levels.
As expected after the consolidation in the $1,690-1,745 range, prices have broken higher. Supports are now at $1,735 followed by $1,720.
Unexpected fall below $1,702 could cause doubts on our bullish expectations and postpone the bullishness temporarily. Favoured view expects that while supports in the $1,725-35 levels hold, prices could gradually grind higher in the coming sessions towards important resistances at $1,790-95.
A close above $1,800 could further add to the bullish sentiment, which could further aim for the all-time high at $1,920.
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. As mentioned earlier update 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 to still be intact.
Therefore, look for gold futures to rise again.
Supports are at $1,735, $1,720 and 1,695 and Resistances are at $1,765, $1,795 and $1,831.
(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.)