Comex gold futures rose on Thursday as the euro hit a two-week high against the US dollar, with investors waiting for meetings of key central banks and the US-North Korea summit all due next week. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.42 per cent to 832.59 tonnes on Wednesday, the lowest in over three-months.

Comex gold futures have been consolidating with a mild bearish bias now. Though the overall picture still hints at bullishness ahead, the near-term has been neutral to mildly bearish hinting at further weakness ahead. 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 $1,375 an ounce levels. In the coming week, we expect prices to find resistance in the $1,305 zone and edge lower again towards the recent lows at $1,278 or even lower. The favoured view expects prices to edge higher to $1,305 levels. Only a close above $1,335 could revive hopes for a retest of $1,365 or even higher.

Wave counts: It is most likely that a fall from the 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 levels 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 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 $1,450-75 in the form of wave “B”. We will re-assess around $1,450-70 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, sell Comex gold on rallies to $1,305 with the stop-loss at $1,313 targeting $1,278 followed by $1,265.

Supports are at $1,289, 1,278 and 1,260. Resistances are at $1,310, 1,325 and 1,355.

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

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