Comex gold futures rose on Thursday, supported by uncertainty surrounding U.S. President Donald Trump's economic policy after Wednesday's Federal Reserve minutes failed to give the market much direction, despite its support for interest rate hikes. Many Fed policymakers said it may be appropriate to raise interest rates again "fairly soon" should jobs and inflation data come in line with expectations, according to the minutes of the Fed's last policy meeting. The minutes of the Jan. 31-Feb. 1 discussion also showed the depth of uncertainty at the Fed over the lack of clarity on the new Trump administration's economic programme. Investors were also looking ahead to an address by U.S. President Donald Trump to Congress next week at which he is expected to announce tax policies.

Comex gold futures moved perfectly in line with our expectations. As mentioned earlier, prices taking out the near-term highs at $1220, has increased the chances of this rally to extend to the next resistance at $1235-40 zone. Prices are finding good support around $1220-25 levels, and it looks like this trend could continue towards $1260-65 levels in the coming sessions. As mentioned in the previous update, a daily close above $1225, could again revive bullish hopes and such a rise will hint that the downward correction has ended, and one should be ready to abandon the bearish view if prices close above $1225 levels. The present firmness in prices despite a strengthening dollar hints at decoupling in the inverse relationship with it. Favoured view now expects support in the $1225-30 zone to hold dips if any. Though the $1240-45 zone is a strong one to cross in the near-term, chances exist for an extension even to $1265-75 eventually. Supports are seen at $1220 followed by $1205-10 levels now. We still maintain our broader bullish view of gold in the long-term. And the current fall to recent lows could once again be an opportunity to do some bottom picking in 2017. Favoured view expects prices to initially edge higher towards resistance mentioned above. Only an unexpected fall below $1190 could hint at weakness once again.

We will take a look at the wave counts now and understand the possible scenarios that can unfold going forward. It is most likely that the fall from the all-time highs at $1925 to the recent low of $1088 so far, was either a possible corrective wave "A", with a possibility to even extend towards $1025-30 levels or a complete correction of A-B-C ending with this decline. Subsequently, to this decline, a corrective wave "B" could unfold with targets near $1375 or even higher. After that, a wave "C" could begin lower again. Alternatively, we can also expect wave "B" to extend to $1476 levels. If the current decline as a whole from $1920 can be considered as a fourth wave, then the fifth wave could begin and cross $1700 in the long-term. But, failure to follow-through above $1355 has dashed any hopes of any impulsive up move. As prices has broken certain important supports and shows weakness targeting $975 levels, we are tilted towards looking at this as a corrective wave "C" in progress. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have gone above the zero line of the indicator again, indicating a bullish reversal. Only a cross over again below the zero line could hint at a reversal in trend to bullish.

Therefore, Buy Comex gold around $1225-30 with stop loss at $1214 targeting $1260 followed by $1,278.

Supports are at $1225, $1,210 & $ 1,185 and Resistances are at $1255, 1278 & 1310.

The writer is the Director of Commtrendz Research. There is risk of loss in trading.

Related Topics
comment COMMENT NOW