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Comex gold futures rose sharply higher on Friday as a weakening dollar and signs of economic recovery boosted the metal as a hedge against rising inflation in the longer term. The dollar, however, turned higher against the euro towards the end, as a drop of US consumer confidence triggered safe-haven buying into the currency, pressuring the metal. Soaring deficits in the US and the UK have triggered investment buying in gold and silver. Demand for Gold-backed ETF securiti es, coins and investment-bar was seen robust. It also rose on some geo-political concerns in Saudi on news of an attack on a member of the Saudi royal family.

Comex gold futures are moving perfectly in line with our expectations. As expected we saw a push higher towards $965 levels. As mentioned in the previous update a bullish triangle pattern is in the making. Important resistance is at $974-75 levels being a trend line resistance point as seen in the chart. And as long as $945 support remains intact, we expect gold futures to consolidate and rise higher towards $990 levels or even higher. However, direct fall below $934 could lead into another round of consolidation. Favoured view still expects prices to find support and rally higher again. 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 consolidate and rise higher. Supports are at $945, $934 and $924. Resistances are at $974, $989 and $998.

Gnanasekaar T.

(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.)

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