Comex gold futures edged up higher on Thursday, after minutes from January’s Federal Reserve policy meeting showed officials expressed concern that raising interest rates too soon could damage the US economic recovery. Gold had fallen to six-week lows on Wednesday, when hopes for a successful resolution to Greece’s debt talks boosted investor appetite for risk and dumping gold in the process. Markets also kept an eye on developments in Europe, where Greece is negotiating with its creditors to solve a debt crisis. Failure to reach an agreement could see Greece exiting the euro zone, potentially triggering flight-to-safety bids for gold, although such a possibility becoming lesser now.

Comex gold futures moved lower but found good support near the psychological $1,200 an ounce levels. As cautioned in the previous update, in case, prices find it difficult to cross the resistances at $1,257, then the decline could continue lower again towards $1,200 levels or even lower to $1,175. Prices have taken support at a crucial trend line support point at $1,195-97 and bounced from there. The retracement could test initial resistances at $1,237 followed by strong resistance at $1,255 levels. The short-term technical picture is still supportive even though prices went below $1,200 briefly and above-mentioned resistances looks likely to be tested in the coming sessions. Only a close above $1,257 could revive and confirm bullish hopes for a turnaround now. Such a move could take prices higher towards $1,300 levels again or even higher. On the other hand fall below $1,167 could reaffirm the big picture bearish view for gold. Favoured view expects move higher again while supports hold.

The wave counts have to be revisited once again. As illustrated in the previous update, if prices close above $1,255 we can assume that the declining impulse has ended and a new corrective one has begun. It is most likely that the fall from the all-time highs at $1,925 to the recent low of $1,130 was either a corrective wave “A” and a wave “B” is in progress with targets near $1,435 or even higher. It is also possible that the entire corrective A-B-C got over and a new impulse is in progress targeting $1,527-30 or even higher in the medium-term. If prices do cross-over above $1,435, then we can settle for the latter. 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, indicating bearishness again. Only a cross over again above the zero line could hint at a bullish reversal.

Therefore, look to buy Comex gold on dips to $1,200-05 with a stop loss $1,185 targeting $1,237 initially followed by $1,255.

Supports are at $1,200, 1,175 and 1,165. Resistances are at $1,237, 1,255 and 1,275.

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

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