Buy Comex gold if it dips to $1,200-05/ounce

Comex gold futures ended higher on Thursday as the dollar remained under pressure following sluggish US data that pushed back expectations of when interest rates in the world’s largest economy will rise. The Federal Reserve has said it would raise rates only when data points to a strengthening economy. Bullion could also find some support from the prospect of a disruption to supply in South Africa because of a labour dispute over pay. Comex gold futures moved against expectations.

As mentioned in the previous update, expect prices to get a push towards near-term resistances. After moving in a broad range, prices have broken out of that range finally, and are showing signs of sustaining above $1,200/ounce levels.

As mentioned earlier, only a successful attempt to close above $1,225 with good volumes could take prices further higher towards important resistance levels near $1,245/55. Very strong support is seen near $1,170-75 levels. Only a decline below $1,168 could revive bearish expectations again. Such a move could take prices lower again towards $1,141 or even lower to $1,100. As cautioned earlier, though the short-term charts are still looking neutral to bullish, the big picture still does not hold any major promise for a rally higher. Unexpected fall below $1,170 should warn of a decline, and abandon any long trades in gold futures.

The wave counts need to be altered as prices move, but the overall trend looks weak and at present levels makes it difficult to take any directional call decisively. So, for now, we will stick to our previous assessment. It is most likely that the fall from the all-time highs at $1,925 to the recent low of $1,130 was either a corrective wave “A” and a wave “B” is in progress with targets near $1,435 or even higher. It is also possible that the entire corrective A-B-C got over and a new impulse is in progress targeting $1,527-30 or even higher in the medium-term. If prices do cross -over above $1,435, then we can settle for the latter. 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, indicating a possible bullish reversal in trend again. Only a cross over again below the zero line could hint at bearishness.

Therefore, buy Comex gold on dips to $1,200-05 with a stop-loss of $1,188 targeting $1,245/55.

Supports are at $1,200, 1,175 and 1,145. Resistances are at $1,225, 1,252 and 1,285.

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

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