Sell Comex gold if it rallies to $1,178-80/ounce

Comex gold futures were slightly higher Thursday, as tensions over Greece’s negotiations with its creditors helped snap four sessions of decline, though gains were limited by caution over the metal’s longer-term outlook. The metal has held largely between $1,160 and $1,230 since mid-March, struggling to break higher despite an ostensibly bullish rise in tensions over Greece.

Comex gold futures have once again failed to sustain above $1,200/ounce levels. As mentioned in the previous update, very strong support was seen near $1,160-70 levels. Prices tested our initial targets at $1,205 levels but failed to proceed further higher towards $1,220-25 levels against expectations.

As cautioned in the previous update, even after this recent bounce from support levels, the short-term charts are still looking neutral to bullish, but the big picture still does not hold any major promise for a rally higher. Favoured view now expects rallies to $1,180-85 followed by $1,195-1,200 to cap for a decline towards $1,152-55 levels in the coming sessions.

However, only a convincing close above $1,234 could revive expectations of a move towards $1,257-60 levels. A close below $1,160 could be the trigger clearly reviving bearish expectations again. Such a move could take prices lower again towards $1,150 or even lower to $1,100.

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 record peak 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 below the zero line of the indicator, indicating a bearish reversal in trend again. Only a cross over again above the zero line could hint at a bullish reversal.

Therefore, sell Comex gold on rallies to $1,178-80 with a stop-loss of $1,206 targeting $1,152 followed by $1,120.

Supports are at $1,165, 1,150 and 1,125. Resistances are at $1,185, 1,205 and 1,225.

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

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