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Comex gold futures ended higher on Thursday and broke below the key psychological support at $1,300 an ounce as robust economic data from China and Europe improved risk appetite and investors shunned the haven asset. With physical and investment demand dwindling, there are few triggers for gold to push higher. However, bullion could see some haven buying as fighting in the Gaza strip rages with no truce in sight yet. Data from China showing gold demand in the first half of 2014 declined year-on-year are also adding pressure. Comex gold futures are lower, according to our expectations. As mentioned in the previous update, we expected prices to get capped in the $1,315-25 zone and decline. Good resistance was seen in the $1,320-25 zone and subsequent fall below $1,305 has opened the downside for gold prices in the short-term. Minor support will be seen in the $1,290-92 levels. Fall below $1,285 could expose gold futures to further downside targeting $1,265 being a strong trendline support point. Below here the fall could be very sharp targeting recent lows at $1,185 or even lower to $1,145 levels on the downside. However, while the $1,265 support holds, prices could still gradually inch higher and take out the strong $1,355-65 resistance zone. Only a daily close above $1,330 can revive bullish hopes again.
We will now go with the alternative wave counts that we have considered broadly in our earlier updates. From the peak of $1,920 a corrective decline in the form of “A-B-C” is already over at $1,181 and a new impulse has begun. Confirmation of such an impulse will be seen above $1,445. Fall below $1,250 could now force us to abandon this scenario and look at a bearish one targeting $1,095. RSI is in the neutral zone now indicating that it is neither overbought a possible correction in the offing.
The averages in MACD are still above the zero line of the indicator hinting at bullish to be intact. Only a cross over below the zero line again could hint at bearishness again.
Therefore, look to sell gold on upticks to $1,310 zone with a stop loss at $1,330 targeting $1,285 followed by $1,265.
Supports are at $1,291, 1,275 and 1,263 and Resistances are at $1,325, 1,348 and 1,375.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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