Comex gold futures were marginally higher on Friday on bargain hunting and a recovering Euro. Gold was supported by a stronger euro against the dollar ahead of the US Independence Day long weekend, even as crude oil was on track to fall almost 10 per cent for the week after a larger-than-expected decline in June US non-farm payrolls. Bullion prices fell sharply for the week on demand worries amid signs of slowing economic recovery and lacklustre US auto sales. Gold was under pressure as deflation talk was back in focus and as the metal had failed on several occasions to break above recent highs. SPDR, however, had its biggest percentage inflow in the quarter to end-June since the record-breaking first three months of 2009, according to data released by the fund, though the pace of growth slowed toward the end of the quarter.
Comex gold futures have given away the bullishness for the near-term. As cautioned in the previous update, an unexpected fall and close below $1,225 will hint at the beginning a strong correction in the coming sessions. Rallies could now find strong resistance in the $1,223-25 zone now.
Such a fall can now take prices even lower towards $1,170. A long-term trend line support comes in at $1,175-80 levels now. This also happens to be a fibonnaci retracement point and therefore, strong support can be seen in the coming sessions there. Failure to hold support at $1,170-75 levels could drag prices even lower towards $1,135 levels or even lower.
Our wave counts are indicating that the impulse moves have ended and corrective ones have started and a close below $1,115 would validate this view.
Elliot wave analysis now indicates a possibility of a fifth wave impulse possibly getting over at the recent high of $1,266. A daily close below $1,135, will now confirm the beginning of a possible A-B-C, corrective move has started.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold.
The averages in MACD are above the zero line of the indicator indicating a bullish trend to be intact. Negative divergences are confirmed which is bearish and could result in a sharp fall.
Therefore, look for gold futures to test the resistances and then fall subsequently.
Supports are at $1,195, $1,175 and $1,135. Resistances are at $1,215, $1,225 and $1,245.
