Comex gold futures edged lower on Thursday but held near the five-week highs hit in the previous session, as expectations that the US Federal Reserve will hike interest rates this month weighed on gold prices . However, the geopolitical concerns provided some support.

San Francisco Federal Reserve Bank President John C Williams said Wednesday that three rate increases are most likely this year. However, some recent soft US economic data has raised questions whether the Fed will stay with that plan. The US jobs data on Thursday, (ADP employment) and Friday (non-farm payrolls) is going to be a key driver for bullion. Positive payroll data from the US could mean the Fed will raise rates as expected at its June 13-14 meeting. Markets believe there is an 87 percent chance of a rate rise, according to CME Group's FedWatch tool.

Comex gold futures moved perfectly in line with our expectations so far. As mentioned earlier, consolidation is underway between $1245-1265 levels now. We expect prices to inch higher towards $ 1283-85 levels in the coming sessions post the consolidation.

Prices have inched higher and are finding strong resistance at $1272-73 levels. As the prices manage to close above $1272, more upside towards $1285 or even higher to $1295/97 can be seen. Chances exist even for an extension to $1305 or even higher to $1330-35 levels, a potential target area in the coming months.

Favoured view expects prices to push higher towards resistances mentioned above. Failure to cross $1285 could once again result in loss of faith for gold. Only an unexpected decline below $1240 could hint at a resumption of the downtrend. Such a move could take prices lower towards $1195, which is not our favoured view now. Price structures are supportive of an up move in the short-term while supports hold.

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 $1925 to the recent low of $1088 so far, was either a possible corrective wave "A", with a possibility to even extend towards $1025-30 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 $1375 or even higher. After that, a wave "C" could begin lower again. Alternatively, we can also expect wave "B" to extend to $1476 levels. If the current decline as a whole from $1920 can be considered as a fourth wave, then the fifth wave could begin and cross $1700 in the long-term. But, failure to follow-through above $1355 has dashed any hopes of any impulsive up move.

As prices have broken certain important supports and shows weakness targeting $975 levels, we are tilted towards looking at this as a corrective wave "C" in progress. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have gone above the zero line of the indicator again, indicating a bullish reversal. Only a cross over again below the zero line could hint at a reversal in trend to bearish.

Therefore, Buy Comex gold around $1250-55 with stop loss at $1239 targeting $1285 followed by $1295.

Supports are at $1245, $1,231 & $ 1,220 and Resistances are at $1274, 1285 & 1305.

(The author is the Director of Commtrendz Research and there is risk of loss in trading. He can be reached at gnanasekar.t@gmail.com .)

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