Comex gold futures were lower on Thursday following its biggest quarterly loss in a year, after upbeat US jobs data boosted speculation that the Federal Reserve could press ahead with an interest rate hike this year.

Comex gold futures moved perfectly in line with our expectations.

As mentioned in the previous update, as per the price structure, there is a chance for the uptrend to resume higher once prices cross $1,130-35 levels. Prices found strong resistance near $1,150 and could not capitalise on the gains.

The present state of charts looks mixed, but not yet displaying any clear trend either ways. The friendly picture that was seen earlier last week does not seem to sustain and potential exists for a sharp decline once below $ 1,107.

A last line of support lies at $1,107-08 from where prices could stage another modest rally higher.

However, such attempts in the past have fizzled out, making us believe a sharp down move is in the offing. But, below $1,105 the bearish momentum could build up once again threatening to break the recent low of $1,077 and heading towards $1,045. Strong short-term resistance is seen at $1,125-35 range in the coming week.

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, sell Comex gold if it dips to $1,104 with a stop-loss of $1,124 targeting $1,077 followed by $1,045.

Supports are at $1,105, 1,078 and 1,045. Resistances are at $1,125, 1,155 and 1,168.

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

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