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Comex gold futures were lower on Thursday, mostly due to the dollar strength and thin trading conditions ahead of the long holiday weekend in the US. Weak economic data from the Euro zone has raised expectations that the European Central Bank will resort to more aggressive easing of monetary policy.
Comex gold futures moved perfectly in line with expectations. As anticipated, favoured view expected prices to hold supports around $1,170-75 an ounce levels and rise again.
A consolidation is seen as prices find it difficult to go past the psychological resistance at $1,200 presently. Momentum in the short-term picture looks favourable for a push higher towards $1,235-40 levels. Though short-term picture looks supportive for prices, the weekly picture still shows weakness.
Prices are seen moving in a narrow range, preparing for the up move or try to attempt testing resistances near $1,230-40 levels. Near-term support is seen at $1,175-85 levels now.
Failure to hold supports could drag prices initially lower towards $1,145 levels, below which the downtrend could accelerate further.
Favoured view expects that while prices get supported near $1,170-75 levels in the coming sessions, one more attempt towards $1,230-40 levels or even higher is possible. Only a direct fall below $1,160 could see the decline accelerate further towards $1,145 levels or even lower.
The wave counts have to be revisited again. Fall below $1,250 has forced us to abandon any bullish hopes and look at a bearish one targeting $1,050. We feel the present set of moves from $1,175 to $1,435 is a corrective wave four in an impulse which began from the high of $1,920, with a equality target at $1,020.
However, there are many intermediate levels from where good retracement can be seen. The $1,035-70 could prove to be a good intermediate support. Ideally, from this area, a pullback higher towards $1,300 looks likely.
RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD are below the zero line of the indicator indicating a strong bearish reversal. Only a cross over again above the zero line could hint at hopes of a bullish revival.
Therefore, look to buy Comex gold initially on dips to $1,180-85 with a stop-loss at $1,164 targeting $1,228. Supports are at $1,175, 1,145 and 1,100. Resistances are at $1,210, 1,230 and 1,245.
The writer is the Director of Commtrendz Research and there is risk of loss in trading.
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