Comex gold futures were sharply lower on Thursday, after the Federal Reserve ended its bond-buying stimulus programme on an unexpectedly hawkish note. Gold futures remained range-bound ahead of the European central bank meeting later in the day. A surge in the dollar, in which gold is priced, knocked the metal in recent days. Markets are awaiting the US non-farm payrolls report on Friday, which could turn out to be another key trigger for gold. A strong report could boost the dollar and dull bullion's haven appeal even further. Also concerning is the lack of robust demand in China, the top consumer of the metal, which typically buys a lot of jewellery, bars and coins whenever prices fall. Holdings in SPDR Gold Trust, the top gold-backed exchange-traded fund, have slumped to a fresh six-year low further pressuring prices.

Comex gold futures moved in line with expectations. As cautioned earlier, though short-term picture looks supportive for prices, the weekly picture still shows incredible weakness and any up move could prove to be a corrective one within a larger downtrend. Our favoured view expects resistances to cap for a decline below $1,180 targeting $1,145-50 initially. Near-term support is seen at $1,130 levels. Any failure to hold support here could drag prices towards $1,050 levels in the coming sessions. Any pullbacks could find it difficult to cross $1,160-65 levels in the short-term and only a close above $1,177-82 could turn the picture to neutral. Though the current weakness looks to continue, things will turn cautious below $1,100. Below $1,100 there are various supports which can lead to a stronger retracement upwards.

The wave counts have to be revisited again. A 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 moves from $1,175 to $1,435 is a corrective wave four in an impulse which began from the high of $1,920, with a 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. RSI is in the oversold zone now indicating a possible upward correction in the offing. The averages in MACD have once again gone below the zero line of the indicator indicating a strong bearish reversal. Only a cross over again above the zero line could hint at hopes of a bullish revival.

Therefore, look to sell Comex gold to rallies to $1165-70 stop loss 1185 targeting $1070.

Supports are at $1130, $ 1110 and $ 1070 and resistances are at $1,160,$1177 and 1195.

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

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