The Hindu Business Line : Gold may consolidate, rise

Gold also got a boost from oil prices, which rose briefly on expectations of colder than expected winter season. Spot gold prices could lean more on the dollar for direction in the coming week with the FOMC meet slated next Tuesday.

Spot gold prices moved as per our expectations rising higher after testing the support levels. The rising trend line support at $460 has held well and next important support is at $465 another crucial support level. However, a daily close below $463 will see gold prices falling lower towards $455 a fibonnaci retracement level.

Failure to decisively cross $475 also could also result in loss of confidence in the up trend. In any case, as long as $455 caps the downside, spot gold prices could still test the technical objective at $490 or even higher towards the psychological level at $500.

As per our recent wave counts, the third wave ended at $458 followed by a fourth wave correction in the form of wave A to E, which ended at the recent low of $418 and the fifth wave appears to have begun from there.

A move below $448 will diminish our bullish expectation and signal the beginning of a larger correction lower.

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 being intact overall. The short-term 8-day EMA is at $469.10 and the 34-day EMA is at $464.05. Therefore, look for spot gold prices to consolidate and rise higher.

Supports are at $468, 463 and 458. Resistances are at $475, 478 and 483.

(The author is associated with the Multi Commodity Exchange of India Ltd. The views expressed in this column are his own and not that of his employer. 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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