Gold futures, ended sharply higher on Friday rising to a three-month high helped by rising oil prices and weaker dollar. Gold prices climbed more than $20 this week as oil rallied to its highest level this year, while the dollar fell to five-month lows against a basket of currencies on signs of an easing of recession, boosting the value of gold as a hedge against the US currency. Gold futures largely ignored weak physical demand after a trade group from top gold consumer I ndia said gold imports so far in May have been in the range of 10-15 tonnes, sharply lower compared with May last year.
Comex August gold futures moved perfectly in line with our expectations. As mentioned in the previous update, we anticipated a consolidation before the next move up towards $978-80 levels or even higher. Potential exists for a test of $995 or even higher towards $1003 in the coming sessions. Price structures are looking quite positive even for $1,035. A probable target lies at $1,189 a medium-term target. Near-term support is at $965-67 levels now. Fall below $958-60 level could dent our bullish expectations and postpone the bullishness. We believe that the third wave could have ended at $1,033 and the fourth wave that we have been tracking could have ended at $681 and fifth wave impulse in progress. A daily close above $1,000 is a confirmation of the same. The RSI is in the overbought zone, indicating that a downward correction is in the offing. The averages in MACD are above the zero line of the indicator again, suggesting bullishness to be intact. Only a cross-over below the zero line of the indicator could signal bearishness again. Therefore, expect gold futures to test the resistance levels and then correct lower.
Supports are at $967, 958 & 945. Resistances are at $995, 1005 & 1035.
