Agri Business

Comex gold: prospects brighten, big picture supportive, bullish

Gnanasekaar T | Updated on May 31, 2018 Published on May 31, 2018

Comex gold futures, rose on Thursday, as the dollar eased from 6-month highs hit earlier this week, with prices further supported by concerns over US.-China trade.

Comex gold futures have been consolidating from recent lows. The overall picture still hints at bullishness ahead, while crucial supports hold at $1,278 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 too. From the bottom at $1,045 in December 2015, prices have been making highs so far in 2017, a clear sign of a rising trend, which has made us believe the bigger picture to be supportive despite strong corrective declines from time to time. A positive trigger for the medium-term in sustaining the uptrend is likely to be above a close of $1,375 levels. In the coming week we expect prices to gradually edge higher and break out of the $1,290-1,310 levels and move higher towards $1,325 levels subsequently and failure to cross here could drag prices lower again to $1,278 which is not our favoured view. Our favoured view expects prices to edge higher to $1,325 levels. Only a close above $1,335 could revive hopes for a retest of $1,365 or even higher.

We will take a look at the wave counts now and understand the possible scenarios that can unfold going forward. It is most likely that the fall from the all-time highs at $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 $1,025-1,030 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 $1,375 or even higher. After that, a wave "C" could begin lower again. Alternatively, we can also expect wave "B" to extend to $1,476 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. 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 $1,450-1,475 in the form of wave "B". We will re asses around $1,450-1,470 levels 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 to $1,290-1,295 with stop loss at $1,278 targeting $1,325 followed by $1,355.

Supports are at $1,285, $1,278 and $ 1,260 and resistance at $1,310, 1,325 and 1,365.

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

Published on May 31, 2018
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