Comex gold futures were lower on Thursday falling almost one per cent as higher bond yields dented its investment appeal, while uncertainty over the timing of a US rate hike also weighed. As gold is a zero-yield asset, the rise in returns from US bonds and other markets is seen as negative for the metal. Comex gold futures are moving in a messy broad range. As mentioned earlier, even though prices show some positive signs, still the critical thing for prices is that it is unable to follow-through higher, which could once again lead to weakness in sentiment again. Only a successful attempt to close above $1,225 per ounce with good volumes could take prices further higher towards important resistance levels near $1,245/55.

Very strong support is seen near $1,170-75 levels. A decline below $1,168 could revive bearish expectations again. Such a move could take prices lower again towards $1,141 or even lower to $1,100.

As cautioned earlier, though the short-term charts are still looking neutral to bullish, the big picture still does not hold any major promise for a rally higher. Favoured view still expects prices to get supported for a push higher towards near-term resistances. However, any unexpected fall below $1,170 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 below the zero line of the indicator, indicating a possible bearish reversal in trend again. Only a cross over again above the zero line could hint at a bullish trend.

Therefore, sell Comex gold on rallies to $1,197-1,200 with a stop loss of $1,215 targeting $1,145 initially followed by $1,122. Supports are at $1,170, 1,145 and 1,100. Resistances are at $1,200, 1,225 and 1,255.

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

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