Comex gold likely to rise higher

Comex gold futures ended stronger on Friday as the dollar slid to its lowest level after economic data showed improvement in the US GDP and manufacturing figures. Month-end position adjustments gave prices a boost too. The dollar fell to its lowest for the year, weighed down by higher oil prices, steady stock prices, and data showing an unexpectedly small contraction in the US economy, boosting risk appetite. Firmer crude prices support interest in gold as a hedge against oil-led inflation, and signal firm demand for commodities as an asset class. Comex gold futures are moving higher as expected. A daily close above $960 could open the way for $967 followed by $978 also being a trendline resistance point. Important support is at $937 now and as long as this support remains intact, we expect gold futures to consolidate and rise higher towards $978 levels. Direct fall below $931 could lead into another round of consolidation. Favoured view expects a rally higher to test the trend line resistance level. It is to be seen if prices can cross this important near-term resistance. Failure to do so could lead into another round of consolidation. Elliot wave analysis indicates a possible fifth wave move in progress. This will be confirmed on a rally above $978. A decline below $900 could force us to abandon this count and re look at a fresh one. RSI is in the neutral zone now indicating that it is neither oversold nor overbought. 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 consolidate and rise higher. Supports are at $945, $931 & $924. Resistances are at $967, $978 $989.

To see chart

http://www.thehindubusinessline.com/2009/08/03/stories/2009080351111200.htm

Gnanasekaar T.