Comex gold futures ended the year 1.5 per cent down from 2013-end as a stronger dollar and expectations of an interest rate rise in the US pressured the precious metal and erased gains from early in the year. Markets elsewhere ended the year on a wary note as another sharp drop in oil and worries about Greece's future pressured equity markets that delivered huge returns. The dollar was on track to end 2014 up more than 12 per cent against a basket of major currencies, its best performance since at least 2005. An expected start to a Federal Reserve tightening cycle may strengthen the dollar's appeal in the New Year and dent bullion’s appeal in the process.

Comex gold futures are lower as expected. As mentioned in the earlier update, the coming weeks could see extreme volatility, as the holiday season begins and thin volumes could exaggerate market moves. Gold has been trying to sustain above $1,200/oz, but has failed. Similar attempts were seen again this week, but the result was the same. Failure to sustain and follow-through higher is seen as a sign of weakness. Fall below $1,177 will trigger a bearish move in gold. Immediate support is at $1,154 followed by the recent low at $1,131. Further decline to $1,100 levels also looks likely subsequently. Strong resistance will be seen at $1201 followed by $1,227-28 levels now. The present decline could be a stronger one, having failed to sustain at higher levels. Only an unexpected rise below $1,230 could change the picture to neutral.

The wave counts have to be revisited again. 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 $1,255 we can safely assume that the declining impulse has ended and a new corrective one has begun. The move to $1,238 was in the form of three waves denoting a corrective move upwards within a declining impulse.

RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD are below the zero line of the indicator indicating a possible bearish reversal again. A cross over again above the zero line could hint at a bullish reversal.

Therefore, look to sell Comex gold initially on rallies to $1,190-95 with a stop-loss of $1,212 targeting $1,155 initially followed by $1,130.

Supports are at $1,155, 1,130 and 1,100. Resistances are at $1,185, 1,210 and 1,238.

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

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