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Comex gold futures ended lower as the stronger dollar and tumbling oil prices signalled lingering worries over economic growth and diminished bullion’s appeal as an inflation hedge.

Muted inflation concerns have sent flight-to-quality buying into US Treasuries and the dollar instead of gold. The Commodity Futures Trading Commission, regulator of the US futures market, will move aggressively to rein in excessive speculation in ene rgy and commodity markets by focusing on expanding its existing authority and could have new regulations in place by late October. Clearly, gold and a host of physical commodities were undermined this week by the slackening economic outlook. Surprisingly, calls for a second stimulus package were largely ignored in the gold market.

Comex gold futures fell lower against our expectations. As cautioned in the previous update, fall below $913 has dashed our bullish hopes. This fall has the potential to test recent lows at $865 now. Immediate resistance is at $923-35 levels now. Only a daily close above $934 could reinforce bullish expectations again. It is likely that we see resistances at $925 followed by $933-34 to cap upside attempts for a decline lower towards $892 or even lower in the coming sessions. Direct rise above $935 to cause doubts over our bearish view.

Elliot wave analysis indicates a possible fifth wave move in progress. This will be confirmed on a rally above $978. A decline below $900 could force us to abandon this count and re-look at a fresh one. RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD are still above the zero line of the indicator indicating the bullish trend to be intact. Therefore, look for gold futures to test the resistance levels and then fall lower again.

Supports are at $905, $892 & $877. Resistances are at $926, $934, $947.

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