Comex gold futures ended at a four-week low, but prices were range-bound ahead of a speech by Federal Reserve Chair Janet Yellen this week which will be watched for clues on monetary policy. Holdings of the largest gold-backed exchange-traded-fund (ETF), New York’s SPDR Gold Trust and the largest silver-backed ETF, New York’s iShares Silver, have remained unchanged.
Comex gold futures moved against our expectations. As mentioned earlier, while $1,330 an ounce holds, we can expect prices to edge higher again. It has broken this support and now headed towards another important support near $1,305-10 levels. Prices are expected to move with a negative bias, but the picture for gold has presently turned trendless. A potential target lies around $1,450-55 levels, being an equality target in the coming months. Initial resistance is seen at $1,365-75 levels now. Once above here, prices could push higher further towards $1,400 levels or even higher in the coming sessions. Only an unexpected fall below $1,305 could postpone the bullishness and such a fall could see prices testing $1,290-95 levels being a strong trend line support level. Below here, it could further become bearish for $1,255, which is not our favoured view. Failure to hold support at $1290-95 could clearly dent the prospects of the uptrend. Favoured view still expects prices to be find support around the $1,305-10 levels and then edge higher again.
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 convincingly risen in volumes and closed above $1,300 levels, which further reaffirms our wave count. RSI is in the neutral zone now indicating a that it is neither overbought nor oversold. The averages in MACD are 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 $1,305-10 with stop-loss at $1,290 targeting $1,340 followed by 1,375.
Supports are at $1,305, 1,295 and 1,255 and Resistances are at $1,340, 1,365 and 1,400.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.