Gold futures may test resistance: BL


Comex gold futures ended the year higher in choppy trade as the dollar fell sharply after a report showed US
employers cut more jobs than expected in December. The dollar plunged against the euro in volatile trade
after the weak job report. The disappointing employment report dampened hopes of an economic recovery
putting a dent on rate hike expectations. Players in gold could focus mostly on interest rate expectations.
Investment demand for gold-backed exchange-traded funds remained soft after a lacklustre start to the New
Year. The largest gold ETF, New York's SPDR Gold Trust, reported a further 0.4 tonne dip in its holdings on
Thursday.
Comex gold futures are inching higher in line with our favoured view. Rise above near-term resistance at
$1,115 took prices higher towards important resistance at $1,145. This should prove to be a strong
resistance in the near-term. However, a successful daily close above this level could add to bullishness and
take prices further higher towards $1,160 or even higher towards $1,170. Crucial support is now at $1,115.
Move below this level could trigger a sharp fall towards $1,055 or even lower towards $1,011. Only a deeper
fall below $1,007 will indicate bearishness. Such a fall could take it lower towards $980 or even lower
towards $928, which we do not favour presently.
Elliot wave analysis indicates either a corrective move in the form of A-B-C in progress after a strong
impulse move or a possible end of a five wave impulse at $1,227. All the potential fifth wave targets have
been met. However, one more push above $1,225 cannot be ruled out to complete the fifth wave sequence.
An important Elliot wave objective comes in the $975-980 range for the correction to end. RSI is in the
neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still below
the zero line of the indicator indicating bearishness. Therefore, look for gold futures to test the resistances
and then correct lower subsequently.
Supports are at $1,024, $1,115, and $1,082. Resistances are at $1,145, $1,160 & $1,172.