Gold futures, ended sharply higher on Friday as the slumping dollar and higher oil prices boosted the metal’s appeal as an alternative investment. Rise in energy prices also supported gold. Bullion typically gains when the dollar weakens and oil rises. Crude-oil futures climbed one per cent in New York and are up 38 per cent this year. Due to the overall outlook for inflation and a possible prolonged recovery in the economy, gold should remain a strong choice of investment. The recent stock market rally seems to have outpaced prospects for corporate earnings and economic growth. In recent times, investors have been buying gold as an alternative to shares.
Comex June gold futures moved perfectly in line with our expectations. Near-term resistance is at $965-67 levels. Expect good resistance here to cap for either a corrective fall for a consolidation before the next move up towards $978-80 levels or even higher. As mentioned in the previous update, the big picture structures are still positive and, therefore, we continue our bullish bias as long as $874 holds. Important near-term support is at $935 followed by the next important support at $917/18 levels now. Fall below this 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 neutral zone, indicating that it is neither overbought nor oversold. The averages in MACD have gone above the zero line of the indicator again, suggesting a bullish reversal. 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.
