Gnanasekar T.

Gold futures bounced from a six-week low to finish higher boosted by a softer dollar after a weaker-than-expected May US employment report and a firmer crude oil. COMEX gold futures moved perfectly in line with our expectations. As expected prices bounced higher after testing the important support levels near $625. A daily close above $655 will be a positive sign with the potential to test $678-680 immediately. However, only a clear move above $688-90 will bolster confidence to call for the resumption of up trend with a potential target at $780.

For the week, expect prices to continue the bullishness and test the resistance levels. Based on the current momentum, we now believe that the third wave could have ended at $732 and the corrective fourth wave in progress. The beginning of the fifth wave can be confirmed after a move above $688.

RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are still above the zero line of the indicator suggesting bullishness to be intact. Only a crossover of the averages below the zero line will signal a bearish reversal again. Prices are below the short-term 8 period EMA at $649.50 followed by the 34 period EMA at $650.15. Therefore, look for COMEX gold futures to test the resistance levels in the coming week.

Supports are at $634, 628 and 623. Resistances are at $655, 667 and 678.

(The author is a director at Commtrendz Research and 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.)

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