Comex gold futures ruled lower on Thursday, as the dollar strengthened ahead of the non-farm payrolls on Friday. However, gold manages to hold above the $1,200 levels despite the strength in the dollar. Friday's data will help investors gauge the strength of the US economic recovery and how it would impact interest rates. Comex gold futures are moving in a tight range, post the huge volatile move on Monday. As cautioned, a direct fall below $1,160 could see the decline accelerate further towards $1,145 levels or even lower. The subsequent bounce from there to $1,220 has been impressive squeezing out shorts in the process. Ideally, from current levels prices are expected to grind higher towards $1,255-1,260 levels.

There are multiple support levels between $1,170 and $1,185. It looks like an intermediate bottom has been put in place, but a confirmation for that could be seen above $1,220 levels.

Such a move could see initial resistance at $1,255 followed by stronger resistance at $1,275-80 levels.

Expect a push higher while supports in the above mentioned zone hold. Any unexpected fall below $1,145 could revive bearish hopes. The wave counts have to be revisited again. The fall below $1,250 has forced us to abandon any bullish hopes and look at a bearish one targeting $1,050. We feel the current set of moves from $1,175 to $1,435 is a corrective wave four in an impulse which began from the high of $1,920, with an equality target at $1,020.

However, there are many intermediate levels from where good retracement can be seen. The $1,035-70 could prove to be a good intermediate support. Ideally, from this area, a pullback higher towards $1,300 looks likely.

If prices close above $1220 we can safely assume that the declining impulse has ended and a new corrective one has begun. RSI is in the neutral zone now indicating that it is neither oversold nor overbought.

The averages in MACD are about the cross over above the zero line of the indicator indicating a possible bullish reversal. A cross over again above the zero line could hint at hopes of a bullish revival.

Therefore, look to buy Comex gold initially on dips to $1,175-80. Peg stop loss at $1,155 targeting $1,228 initially followed by $1,255. Supports are at $1,185, $1,170 and $1,145 and resistances are at $1,220, $1,255 and $1275.

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

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