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Comex gold futures ended higher on Thursday as the dollar fell following minutes from the Federal Reserve’s policy meeting showing the US central bank was unlikely to raise interest rates in June.
Gold prices have struggled to break out of a broad range of $1,170-1,230 an ounce range since mid-March, due to uncertainty over the timing of a US rate rise.
Comex gold futures moved against expectations. As mentioned in the previous update, prices have broken out of that range finally, and are showing signs of sustaining above $1,200 levels. Only a successful attempt to close above $1,225 could take prices further higher towards important resistance levels near $1,245/55. Prices failed to close above $1,225 and the subsequent fall to $1,202 has mildly dented the bullish sentiment. Very strong support is seen near $1,198-1,202 levels. Only a decline below $1,190 could revive bearish expectations again.
Such a move could take prices lower again towards $1,141 or even lower to $1,100. Unexpected fall below $1,180 should warn of a decline, and abandon any long trades in gold futures.
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 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 above the zero line of the indicator, indicating a possible bullish reversal in trend again. Only a cross over again below the zero line could hint at bearishness.
Therefore, buy Comex gold on dips to $1,200-05 with a stop loss of $1,190 targeting $1,245/55. Supports are at $1,200, 1,175 and 1,145. Resistances are at $1,228, 1,252 and 1,285.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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