Comex gold futures were lower on Thursday in more than a week on Thursday, pressured by a firmer dollar after the Federal Reserve hinted at a possible US rate hike in December, bolstering the dollar and reducing the appeal of safe-haven bullion. The Fed kept interest rates unchanged on Wednesday as expected but surprised with a direct reference to its next policy meeting. The hawkish tone sent the dollar soaring against a basket of major currencies to its highest level in more than two months. Comex gold futures are moving in line with our expectations. As mentioned in the previous update, prices are once again expected to come off from resistance levels.

As mentioned earlier, charts have started turning friendly now, but gold futures seem to be finding it difficult to sustain at higher levels and cross the resistance levels. Though, it still shows promise of crossing the important psychological resistance at $1,200 per ounce, a possible decline to $1,145 could dash our bullish hopes.

Near-term supports are now seen at $1,143-45 levels in the coming sessions. We favour prices to find supports in the above mentioned area and then rise higher again, but an unexpected fall below $1,140 could force us to abandon our bullish view. Such a fall could once again revive bearish expectations for a test of recent lows or even lower. Favoured view expects prices to edge higher while support hold. We will take a look at the wave counts now and understand the possible scenarios that can unfold going forward. 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 $1,255 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. We are more inclined to go with this as a favoured scenario. If prices do cross-over above $1,435, then this possibility will be confirmed.

In the short-term though, prices are likely to be under pressure and could edge lower towards $1,025-45 levels. RSI is in the neutral zone now indicating that it is neither oversold nor overbought.

The averages in MACD are above the zero line of the indicator again, indicating bullishness to be intact. Only a cross over again below the zero line could hint at a bearish reversal. Therefore, buy Comex gold near $1,143-45 with a stop-loss of $1,138 targeting $1,175 followed by $1,195.

Supports are at $1,145, 1,125 and 1,110. Resistances are at $1,175, 1,195 and 1,205.

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

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