Comex gold futures endedhigherFridayon prospects of possible Greek deal with private bondholders which could bolster risk appetite further. Gold’s rise was overshadowed by four percent surge in silver due to technical breakouts and expectations of positive momentum going forward. U.S. Mint data showed that sales of silver American Eagles totalled 5.3 million ounces on Friday, on pace to surpass its record high of 6.4 million ounces set in January 2011. With monetary policy easing seen across the world including emerging markets, chances are more likely that gold is going to do very well.
Comex gold futures are moving in line with our expectations. As mentioned in the previous update, a rise above $1645 could drive prices higher again and declines to $1625 could hold well again for move towards $1700 levels. Prices are moving in line with this view so far. Break above resistances at $1672 could open the way up for the near-term trend line resistance at $1685. Above here it could aim for the psychological resistance at $1700 or even higher to $1760 on the upside. A decline below $1625 could however dash our bullish hopes and take prices lower again. Big picture indicates that the recent low below $1525 as a possible intermediate bottom and the uptrend could resume higher.
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 $1900 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 1535 and a wave “B” ended at $1804. A possible wave “C” has possibly ended at $1523.This view could gain momentum once prices cross $1710 on the upside.RSI is 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 indicatorhinting at bearish to be intact.Only, a cross-over above the zero line again could hint at resumption in bullish trend.
Therefore, look for gold futures to rise higher.
Supports are at$1,655, $1640 and $1,625. Resistances are at$1,672, $1,685 and $1,705.
(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.)