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Gnanasekar. T

Gold futures ended higher on short covering and renewed physical demand ahead of the festival season. A weakening dollar also lured investors back into the market following gold's recent sell-off to three-month lows. A bounce in both oil and copper prices also helped pull investors back into the precious metals, while Wednesday's decision by the Federal Reserve to hold rates steady was supportive to gold as well by leaning on the dollar.

The dollar softened against the major currencies on prospects of slower US economic growth possibly leading to interest rate cuts in the coming months.

COMEX gold futures corrected higher in line with our expectations. Good support was seen in the $578-80 levels. Resistance will now be seen at $603-605 levels and the pullback can extend to $615 levels or even higher to $630 being the trend line resistance point. However, there are no clear signs of sustained bullishness and we currently view this as a corrective up trend only.

Only an unexpected break below $578 will take prices to $570 or even lower to $550 levels, which we do not favour. We believe that the third wave could have ended at $732 and the corrective fourth wave possibly ended at $546. Currently, we could be in a corrective move within the fifth wave. It could also become an irregular wave "B" if prices fail to go above $680 and subsequently dip below $575.

RSI is in the neutral zone indicating that it is neither overbought nor oversold.

The averages in MACD are below the zero line of the indicator suggesting bearishness. Only a crossover of the averages above the zero line will signal a bullish reversal. Prices are above the short-term 8-day period EMA at $593 indicating short-term bullishness followed by the 34-day period EMA at $614. Therefore, look for COMEX gold correct higher and find resistance.

Supports are at $587, 578 and 570. Resistances are at $603, 615 and 623.

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