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Comex gold futures traded lower on Thursday, as investors cut exposure to gold-backed funds and weighed the impact of Ukraine tensions, while worries over the strength of Chinese demand continued to weigh. US industrial production rose at a faster-than-expected clip in March, while another report showed economic activity picked up in recent weeks. A pick-up in economic growth would encourage investors to gain exposure in riskier assets, rather than buying gold as a form of insurance against economic risk.
Comex gold futures fell against our expectations. Gold futures have been quite volatile with the overall bias still weak. Though it looked like a possible bottom near $1,181/ounce recently, price action has so far has not been very conclusive. With any rallies finding it difficult to sustain and follow-through, we can expect prices to be capped in the $1,310-15 range and gradually edge lower towards initial target at $1,245 followed by $1,175-80 levels. Only a move above $1,332 could cause doubts over our bearish view.
The wave counts have been modified once again. This happens most of the times with Elliot wave analysis, and tends to be confusing to lay investors following this concept. However, despite this short-coming this is one of the best forecasting techniques in existence. We will now go with the alternative wave counts that we have considered broadly in our earlier updates. From the peak of $1,920 a corrective decline in the form of “A-B-C” is already over at $1,181 and a new impulse has begun. Confirmation of such an impulse will be seen above $1,445. Fall below $1,250 could force us to abandon this scenario and look at a bearish one targeting $1,095. We will now wait for a confirmation for a fall below $1,250.
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 hinting at a bearish reversal. Only a cross over above the zero line could hint at a bullish reversal again.
Therefore, immediately, one can look to sell gold in the $1,310/15 with a stop loss at $1,332 targeting $1,265 followed by $1,240.
Supports are at $1,285, 1,245 and 1,227. Resistances are at $1,315, 1,332 and 1,345.
The writer is the Director of Commtrendz Research. There is a risk of loss in trading.
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