Comex gold futures, posted a six-month low on Thursday, weighed down by a firm dollar and the US Federal Reserve Chair’s outlook for higher interest rates. The dollar held near an 11-month high against a basket of currencies on Thursday, supported by a rise in the US yields, while the pound was at its lowest level since November 2017 ahead of a Bank of England monetary policy decision. The dollar strength follows a remark from Fed Chairman Jerome Powell on Wednesday said the US jobs market did not appear overly tight and the Federal Reserve should continue with a gradual pace of interest rate rises to balance the Bank's employment and inflation goals in a strong economy. Meanwhile, a developing trade war between the United States and China is weighing on business confidence and could force central banks to downgrade their outlooks, some of the world's most powerful monetary policymakers said on Wednesday at a meeting in Portugal of central bank heads, which could be the only bright spot for gold.

Comex gold futures tanked lower breaking key supports and stops. As mentioned earlier, though, the overall picture still hints at bullishness ahead, the near-term has been neutral to mildly bearish hinting at further weakness ahead. As cautioned in the previous updates, failure to cross $1,310-20 could drag prices lower back again to $1,278. 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. A positive trigger for the medium-term in sustaining the uptrend is likely to be above a close of $1,335 . In the short-term, we got that wrong hoping for prices to sustain and push higher after consolidating in the $1,295-1,310 range. Dip below $1,281 has opened the possibility of prices falling to near-term supports around $1,250-1,255 with chances of an extension even to $1,235-40. Our favoured view now expects prices to edge lower to $1,245-55 while $1,278-80 caps. Only a close above $1,310 could revive hopes for a retest of $1,365 or even higher.

We will take a look at the wave counts now. 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 $1,025-30 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 . 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 asses around $1,450-70 on the potential for a wave "C" decline subsequently. RSI is in the oversold zone hinting at a upward correction in the offing before more declines can be seen. The averages in MACD are 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, Sell Comex gold on rallies to $1,275/80 with stop loss at $1,292 targeting $1,255 followed by $1,235.

Supports are at $1,255, $1,235 & $ 1,210 and Resistances are at $1,278, 1,295 & 1,310.

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

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