The Hindu Business Line : Gold may test support levels

Prices are starting to show signs of exhaustion indicating a corrective fall in the offing. Initial support will be seen at $523 followed by crucial support at $510-12 levels being the rising trend line support point. The overall bullish trend remains intact as long as $503-05 levels is well supported. Immediately, we favour a good correction lower towards support levels mentioned below.

As per our recent wave counts, we believe the current move to be an explosive third wave move ending at $541 followed by the fourth wave correction in progress. Though there are signs of the fifth wave to have begun, we will prefer to wait till some crucial resistances to be taken out. RSI is in the overbought zone indicating that it is neither overbought nor oversold. It has also started showing negative divergences.

The averages in MACD are still above the zero line of the indicator suggesting bullishness to be intact. Only a crossover of the averages below the zero line will signal bearishness again. Prices are above the short-term 8-day EMA is at $522 while the medium-term 34-day EMA is at $505. Therefore, look for spot gold prices to test the support levels in the coming weeks.

Supports are at $523, 518 and 505. Resistances are at $533, 538 and 547.

(The author is in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

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