• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books
• Gallery

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Comex gold futures rose sharply higher on Friday in line with a weaker dollar and a gradual economic recovery. Despite signs that the economy is clawing its way back, the dollar remaining weak and inflation fears are rife, and investors are looking for a safe-haven for their money. With the FED expected to maintain interest rates at low levels, the dollar will continue to weaken and inflation to rise. Though fundamentally, physical demand continues to suffer on the back of high prices, investment demand continues to be robust. Demand for gold jewellery has slipped amid the recession and is not the dominant force it used to be. However, rising investment demand especially from exchange-traded funds, which make it easier to buy has compensated for the shortfall in consumption. Comex gold futures are moving perfectly in line with our expectations. As expected, a push into the $1,000 zone and a weekly close above this level adds further confidence to our bullish view. As we have been maintaining a bullish view for some time based on the big picture charts, we believe the bullishness to extend with some minor corrections in between which could make bumpy and volatile in the coming sessions. As long as $980 support remains intact, we feel gold futures to inch higher towards $1,035. Unexpected fall below $974 could cause doubts on our bullish view. Favoured view still expects prices edge higher as long as supports hold. Elliot wave analysis indicates a possible fifth wave move in progress. This has been confirmed above $978. A potential fifth wave target lies at $1,100. RSI is in the overbought zone now indicating a possible downward correction is in the offing. 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 correct lower. Supports are at $996, $982 & $974. Resistances are at $1,020, $1,035 and $1,078.

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.)

More Stories on : Gold & Silver | Technical Analysis

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line