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Comex gold futures edged up higher on Thursday after comments from the Federal Reserve pushed back expectations for a first US rate hike in nearly a decade and bargain hunting from Chinese buyers snapped up metal on their return from the Lunar New Year. Import demand from the world's second biggest gold consumer is likely to recover this year.
Comex gold futures moved lower but found good support again near the psychological $1,200/oz levels. As expected, prices have bounced from near-term supports below $1,200 levels. The retracement could now test initial resistances at $1,237 followed by strong resistance at $1,255 levels. As illustrated in the previous update, the short-term technical picture is still supportive even though prices went below $1,200 briefly and above-mentioned resistances looks likely to be tested in the coming sessions. Only a close above $1,257 could revive and confirm bullish hopes for a turnaround now. Such a move could take prices higher towards $1,300 levels again or even higher. On the other hand, a fall below $1,167 could reaffirm the big picture bearish view for gold. For the coming week, expects price to move higher again while supports hold. However, failure to cross near-term resistances at $1,235/37 could revive bearish sentiments again.
The wave counts have to be revisited once again. If prices close above $1,255 we can assume that the declining impulse has ended and a new corrective one has begun. It is most likely that the fall from the all-time highs 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 bearishness again. Only a cross over again above the zero line could hint at a bullish reversal.
Therefore, look to buy Comex gold on dips to $1,200-05 with a stop loss of $1,185 targeting $1,237 initially followed by $1,255. Supports are at $1,200, 1,175 and 1,165. Resistances are at $1,237, 1,255 and 1,275.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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