Comex gold futures rose on Thursday as a drop in equities boosted its appeal as an alternative asset, heading for its biggest quarterly gain as expectations that the Federal Reserve would press ahead with interest rate hikes receded. Attention is now turning to US non-farm payrolls data on Friday, a key barometer of the health of the world's biggest economy.

Comex gold futures moved higher against our expectations. As mentioned in the previous update, there was a possibility of prices finding support below $1,200/ounce and trying to edge higher again. Prices came close to $1,208 and then moved higher as expected. As cautioned earlier, since the big picture continues to display neutral to bullish tendencies, we are hopeful that important supports could hold for a push higher again.

While supports at $1,200 followed by $1,190 holds attempts to decline, the chances for a break above $1,300 levels still look good. Good resistance will be seen near $1,265-70 levels now. Favoured view in the short-term expects prices to find supports mentioned above and then move higher again.

Only a direct fall below $1,185 could dash our bullish hopes, which could see prices falling further towards $1,135 levels, which is not our favoured view.

Wave counts: It is most likely that the fall from the record $1,925 to the recent low of $1,088 so far, was either a possible corrective wave “A”, with a possibility to even extend towards $1,025-30 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 $1,375 or even higher.

After that, a wave “C” could begin lower again. Alternatively, we can also expect wave “B” to extend to $1,476 levels. If the current decline as a whole from $1,920 can be considered as a fourth wave, then the fifth wave could begin and cross $1,700 in the long-term.

As prices have broken certain important resistances and shows impulsive tendencies, we will now stick with the above count. And as mentioned earlier, once prices reach $1,025-45 levels we will look for any signs of reversal. There are signs of a turnaround, and prices need to convincingly rise above $1,300 levels and close above it.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still 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 bearish.

Therefore, buy Comex gold on dips to $1,220 with a stop-loss of $1,197 targeting $1,265 followed by $1,285.

Supports are at $1,220, 1,195 and 1,165 and Resistances are at $1,245, 1,275 and 1,320.

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

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