Comex gold futures dropped lower on Friday, after US regulators charged investment bank Goldman Sachs, a leading commodities player, with fraud.
A wide range of financial markets from Wall Street stocks to commodities sold off after the US Securities and Exchange Commission charged Goldman Sachs Group Inc with fraud over its marketing of a debt product tied to sub-prime mortgages. Being a big player in the commodities markets, expectations of forced liquidation of gold positions dragged bullion prices lower.
Safe-haven demand was absent in gold, and the dollar instead became a safe-haven as the market digested the prospect of tighter financial regulations in metals and commodities.
Comex gold futures fell lower quite sharply against our expectations. The bullish picture has been altered. Resistance near $1,141/1,145 could cap for a fall towards $1,125/1,121. Fall below $1,120 would hint that the upward impulse is lacking the requisite thrust and hence can lead to further drift towards next supports near $1,055. It looks probable that trend line support at $1,124/1,122 area might hold it from falling further in the coming sessions. We had to give up our bearish view for $975 due to a positive close above $1,145. However, a close below $1,115,will again re-kindle bearish hopes once again.
Our wave counts still remain the same and will need a review on a close below $1,115.
Elliot wave analysis now indicates a possibility of a fourth wave corrective move possibly getting over at the recent low of $1,044. A daily close above $1,145-47, has added hopes of a possible fifth wave like move towards higher level.
Targets are in the $1,245-50 levels. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are gone above the zero line of the indicator indicating a bullish to be intact.
Therefore, look for gold futures to test the support levels and then rise again.
Supports are at $1,125, $1,115, and $1,084. Resistances are at $1,145, $1,155 and $1,170.
