pragneshjain@rathi.

com
21 Mar. 14

Pragnesh Jain
+91 22 4047 7105

Gold Correction is a buying opportunity

The weekly chart of SPOT Gold is at a very crucial juncture and is likely to bounce big way from current levels. It broke above the downwarddownward sloping-channel channel (green trend-line) trend bounced higher and now has retested the channel trend-line trend signalling a positive run from the support of $1320 levels. Coupled with this, it has taken support of the rising trend-line line (yellow) at the same level of $1320 from where a bounce is expected. The MACD is also supportive for the prices. Hourly SPOT Gold chart is showing that the fall from A to B has given a 100% extention in the fall from C to D, which indicates that a pullback from current levels cannot be ruled out. Adding to this, it has formed an Inverse Head and Shoulder Pattern which also has bullish implications. It is currently trading above the neckline (yellow) of the Inv H & S. The bottom of both the patterns in the hourly chart is also $1320 which indicates a positive move from current level is very likely and prices are likley to head towards $1370 levels. A break and close above $1395 can extend gains towards $1430 followed by $1460 levels. All of the above strongly argues that gold prices could bottom out at $1320 and move higher towards $1370, then $1430 followed by $1460. These lead us to believe that it is time to cover shorts for once as a pullback from current levels cannot be ruled out. Break and close below $1320 will negate our view and indicate extension of weakness towards $1300 and $1280.

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Shriram Pitre Pragnesh Jain Sr VP &Research Head Commodities Senior Technical Analyst shrirampitre@rathi.com pragneshjain@rathi.com +91 (22) 4047 7038 +91 (22) 4047 7105

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