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Comex gold futures clawed higher on Thursday, propelled by a weaker dollar, short-covering and physical buying in Asia. Worries of new US trade tariffs on China, however, cast a cloud over the market. Gold has tumbled more than 12 per cent so far in 2018.
Comex gold futures has been moving in line with our expectations. We expected prices to stabilise and reverse higher towards $1,235/ ounce levels.
As we have been maintaining for a while, the medium-term picture still holds some promise, therefore caution should be exercised on getting excessively bearish. A positive trigger for the medium-term in sustaining the uptrend is likely to be above a close of $1,275.
In the short-term, we expect prices to be in the $1,145-1,275 range or even extending to $1,120-25, where strong supports can be seen again. Only a close above $1,275 in the bigger picture could revive bullish hopes once again for $1,335 or even higher.
In the coming sessions, crucial support will come into play around $1,190-95 and we expect prices to stabilise and move higher towards $1,225, or even higher to $1,235. Only a fall below $1,180 could force us to abandon our mildly bullish view.
Wave counts: It is most likely that the fall from the all-time highs at $1,925 to the recent low of $1,088, was either a corrective wave A, with a possibility to even extend towards $1,025-30 or a complete correction of A-B-C ending with this decline.
Subsequently, a corrective wave B could unfold with targets near $1,375 or even higher. After that, a wave C could begin lower again. Alternatively, we can also expect wave B to extend to $1,476.
An eventual break above $1,355 could see the wave B scenario emerge in the coming sessions. While $1,270 holds, we still favour prices rising towards $1,450-75 in the form of wave B. RSI is in the neutral zone hinting that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator again, showing bearishness to be intact. Only a crossover again above the zero line could hint at a reversal in trend.
Therefore buy Comex gold around $1,190-95 with a stop-loss at $1,180 targeting $1,225 followed by $1,236.
Supports are at $1,195, 1,175 and 1,145. Resistances are at $1,225, 1,236 and 1,265.
The writer is the Director of Commtrendz Research.There is risk of loss in trading.
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