Gnanasekar. T

Gold futures settled off from a 25-year high due to profit-taking triggered by a rising dollar and oil prices easing from their recent highs. Prices of gold dived after news that job creation in March was roughly in line with forecasts, leaving intact expectations of further dollar-boosting interest rate hikes.

Continued fund buying took prices above the psychological $600 mark during the week as investors turned to the booming commodities markets for investment alternatives to lagging equity, bond and foreign exchange markets. Continuation of geo-political concerns and high oil prices will continue to underpin gold prices in the coming months.

COMEX gold futures shot higher further extending above the psychological $600 mark. However, it was unable to hold on to gains and eased lower on profit-taking. Strong support will be seen at $585-87 levels and crucial support is at $581 being the fractal top support point. In the bigger picture, the bullish trend looks still intact as long as $571 holds the downside. A move below $570 could weaken the bullish structure and hint at a deeper correction.

As per our recent wave counts, we believe the current third wave to have ended at $575. A corrective fourth wave ended at $534. A possible fifth wave impulse has begun targeting $615 initially followed by an equality target at $621. RSI is in the overbought zone indicating that it is overbought and a correction expected in the coming sessions.

The averages in MACD are above the zero line of the indicator suggesting bullishness. Only a crossover of the averages below the zero line will signal a bearish reversal again. Prices are above the short-term 8 period EMA at $588, indicating short-term bullishness followed by the 34 period EMA at $568. Therefore, look for COMRX gold futures to test the support levels and rise higher subsequently.

Supports are at $585, 581 and 575. Resistances are at 595, 601 and 613.

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