Gold futures settled higher on Friday helped by a softer dollar and firm crude oil prices. COMEX gold futures rose higher in line with our expectations and then fell lower sharply. Stronger support is in the $640 zone now. Another pullback to $665-668 can be expected during the coming week, and a close above $668 could signal a premature end of this correction and then rally higher towards $680 levels.

As mentioned earlier, the overall bullish price structure could weaken only below $634-35 levels and such a fall could lead prices back towards $555 levels. We believe that the third wave could have ended at $732 and the current move being a fourth wave consolidation and the beginning of a fifth wave impulse will be confirmed above $698.

RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator suggesting bearishness. Positive divergences in indicators warn of a bullish reversal in the offing. Therefore, expect gold futures to test the support levels and rise higher subsequently.

Supports are at $651, 648 and 642. Resistances are at $665, 674 and 682.

Gnanasekar. T

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