Comex gold futures ended higher on Friday, recovering from a four-month low on prospects of a rebounding US economy and a smart recovery in the base metals and crude oil complex.
The dollar jumped to a two-month high versus a basket of major currencies after data showed that the US economy lost just 20,000 jobs in April, fewer than economists had forecast.
In the near-term, gold still looks under pressure due to a rebounding dollar, but the long-term fundamentals continues to be intact as inflationary fears will underpin gold’s appeal as a hedge against it.
Comex June gold futures fell in line with our expectations. As mentioned in the previous update, there are some indications in the big picture now for a large downward correction.
A potential head and shoulder is in the making. Daily close below $875 has opened the way for a fall towards $830 or even lower towards $795 levels.
Rallies to $875 followed by $883 could find good resistance in the coming sessions. We believe that the third wave could have ended at $1033 and the fourth wave is in progress right now. We could now be tracking a wave four A-B-C in progress, and once the correction ends, a potential fifth wave impulse could be in the making. The RSI is in the neutral zone, indicating a negative divergence, a sign of possible intermediate top — one of the reasons for our expectations of a large downward correction.
The averages in MACD have gone below the zero line of the indicator suggesting a bearish reversal. Only a cross-over above the zero line will now restore confidence for bullishness ahead. Therefore, expect the gold futures to test the support levels and rise higher again.
Supports are at $845, 830 & 795. Resistances are at $875, 883 & 895.
The dollar jumped to a two-month high versus a basket of major currencies after data showed that the US economy lost just 20,000 jobs in April, fewer than economists had forecast.
In the near-term, gold still looks under pressure due to a rebounding dollar, but the long-term fundamentals continues to be intact as inflationary fears will underpin gold’s appeal as a hedge against it.
Comex June gold futures fell in line with our expectations. As mentioned in the previous update, there are some indications in the big picture now for a large downward correction.
A potential head and shoulder is in the making. Daily close below $875 has opened the way for a fall towards $830 or even lower towards $795 levels.
Rallies to $875 followed by $883 could find good resistance in the coming sessions. We believe that the third wave could have ended at $1033 and the fourth wave is in progress right now. We could now be tracking a wave four A-B-C in progress, and once the correction ends, a potential fifth wave impulse could be in the making. The RSI is in the neutral zone, indicating a negative divergence, a sign of possible intermediate top — one of the reasons for our expectations of a large downward correction.
The averages in MACD have gone below the zero line of the indicator suggesting a bearish reversal. Only a cross-over above the zero line will now restore confidence for bullishness ahead. Therefore, expect the gold futures to test the support levels and rise higher again.
Supports are at $845, 830 & 795. Resistances are at $875, 883 & 895.
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