Comex gold futures jumped to nearly two-year highs on Thursday, after the US Federal Reserve indicated it could be less aggressive in tightening monetary policy next year.

Comex gold futures moved as per our expectations. As mentioned earlier, the weekly price structures still looks healthy for the uptrend to gain momentum despite the current weakness and though the short-term momentum was strongly bearish, we favoured prices to test important supports and push higher again.

As cautioned earlier, a direct rise above $1,237 could cause doubts on our short-term bearish view, which could then see prices pushing higher again. Prices have risen towards $1,313 so far and are set to test the key resistance at $1,345-50 levels. Any dips to $1,278-85 look supportive in the near-term. Favoured view in the short-term still expects prices to be finding support around $1,285-90 levels followed by $1,275 and then edge higher towards important resistances around $1,345-50 levels or higher in the coming week.

Only a direct fall below $1,264 could postpone the bullishness, which could then see prices consolidating in a range before pushing higher again.

Wave counts: It is most likely that the fall from the record highs at $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 $1920 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 need to convincingly rise above $1,300 levels and close above it, which has not happened so far.

RSI is in the overbought zone now indicating that a possible downward correction is in the offing. The averages in MACD have gone 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 $1,285-90 with a stop-loss of $1,271 targeting $1,345-50.

Supports are at $1,285, 1,264 and 1,237. Resistances are at $1,325, 1,355 and 1,385.

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

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