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Comex gold futures rose for the second consecutive session on Thursday after the US Federal Reserve held interest rates steady, while investors awaited US-China trade talks.
Comex gold futures moved higher as per our expectations. As mentioned in the previous update, we expected $1,305-10 per ounce levels to hold for a push higher towards $1,365 paving the way for $1,374 or even higher to $1,400 subsequently. So far, prices have respected the sanctity of the $1,300-05 support.
Failure to follow-through higher above $1,325 could once again dent the confidence of the bulls leading to bigger fall subsequently. The overall picture still hints at bullishness ahead, while crucial supports hold.
A positive trigger for the medium-term in sustaining the up trend is likely to be above a close of $1,375 .
In the coming week, we expect prices to gradually edge higher above $1,325, but failure to close above it could lead to a potential break below $1,300 and such a fall could see a sharp decline to $1,278-80again, which is not our favoured view.
Wave counts: It is most likely that the fall from 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 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 . 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.
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 higher towards $1,450-75 in the form of wave “B”. We will re-assess around $1,450-70 on the potential for a wave “C” decline subsequently.
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 again, indicating a bearish reversal. Only a cross over again above the zero line could hint at a bearish reversal in trend.
Therefore, buy Comex gold on dips around $1,305-10 with the stop-loss at $1,294 targeting $1,335 followed by $1,355.
Supports are at $1,305, 1,295 and 1,280. Resistances are at $1,325, 1,346 and 1,355.
The writer is the Director of Commtrendz Research.There is risk of loss in trading .
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