Comex gold futures ended higher on Friday after the Fed Chairman, Mr Ben S. Bernanke, said he is considering additional bond purchases to boost growth and delayed the timing for an interest rate hike until at least late 2014.
Disappointing US economic growth added fuel to a rally ignited by the promise of interest rates staying lower for longer. Gold also got a boost as an inflationary hedge against inflation as governments print more money to reduce debt.
Markets will be keenly watching to see if the Greece Prime Minister, Mr Lucas Papademos, makes good his promise to clinch a long-awaited bond swap deal.
Comex gold futures are moving perfectly in line with our expectations.
As mentioned in the previous update, a rise above $1,685 could drive prices higher again towards the psychological resistance at $1,700 or even higher to $1,760 on the upside.
As mentioned earlier, big picture indicates that the recent low below $1,525 as a possible intermediate bottom and the uptrend could resume higher.
Positive momentum
Presently, charts shows positive momentum, suggesting that price could rise towards next resistance near $1,775.
Supports are near $1,720 and $1,710.
It has to fall below $1,695 to cause doubts about this bullish expectation.
The wave counts have to be revisited again as a possible fifth has ended. Potential targets for the fifth wave have already been met.
Prices have gone above $1,900 as an extension of the fifth wave. Fall below $1,600 confirmed that a corrective “A-B-C” has started.
It is possible that wave “A” ended at $1,535 and a wave “B” ended at $1,804. A possible wave “C” has possibly ended at $1,523.
This view has regained momentum as prices went above $1,710 on the upside.
RSI
The RSI is in the overbought zone now indicating that a possible downward correction is in the offing.
The averages in MACD have gone above the zero line of the indicator hinting at resumption in the bullish trend.
Therefore, look for gold futures to rise higher.
Supports are at $1,725, $1,710 and $1,695. Resistances are at $1,755, $1,775 and $1,800.
(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. )