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Comex gold futures were mildly lower on Thursday, as the dollar strengthened and continued outflows from bullion-backed funds showed a weak investor sentiment.
Comex gold futures moved in line with expectations. Though the short-term picture looks supportive for prices, the weekly picture still shows incredible weakness and any up move could prove to be a corrective rebound within a larger downtrend.
Our favoured view expects resistances to cap for near $1,165 an ounce targeting $1,145-50 initially. Prices are seen moving in a narrow range after the sharp fall, either preparing for the next down move or try to attempt testing resistances near $1,190-95 levels or even higher to $1,210. Near-term support is seen at $1,145-50 levels.
Failure to hold support here could further drag prices lower towards $1,125 levels in the coming sessions. Though, the current weakness looks to continue, things can turn cautious below $1,100.
Below $1,100 there are various supports which can lead to a stronger retracement upwards. Favoured view initially expects a rebound higher to $1,185-90 levels and if it fails to follow-through higher could see another round of selling which could take prices lower to above-mentioned targets.
Only a fall below $1,130 could see a sharp fall towards $1,070 levels.
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. The current 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 $1,151-52 with a stop loss $1,136 targeting $1,185-90.
Supports are at $1,145, 1,130 and 1,110 and resistances are at $1,175, 1,190 and 1,210.
The writer is the Director of Commtrendz Research and there is risk of loss in trading.
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