Comex gold futures edged lower on Thursday, as global markets took respite from a massive sell-off in risky assets and absorbed Republican Donald Trump’s shocking US presidential win, but gains were capped by firmer Asian stocks.

Comex gold futures moved perfectly in line with our expectations. We expected prices to test resistance around the $1,320-25 levels zone while supports around $1,285 levels holds. We have been hopeful of a recovery towards $1,295-1,300 levels or even higher. Prices recovered rather sharply and retraced back lower as quick as it went up. Such, extreme moves could discourage positions and because of the we see gold prices come under pressure in the coming sessions. Resistances will be strong around $1,295-1,305 range, and this could tend to cap any upside attempts again. Only a fall again below $1,267 could revive bearish hopes for $1,250 levels followed by $1,210 subsequently.

Favoured view expects prices to get capped around the $1,300-05 levels zone and then we either expect prices to edge lower again from there again, or a broad consolidation before push higher again. However, there is a glimmer of hope that the rally last week was not a one-off event and prices could potentially edge higher as long as $1,267 remains undisturbed. Daily close above $1,337 in good volumes could again revive bullish hopes and such a rise will hint that the downward correction has ended and the rally higher above $1,400 levels has begun.

Wave counts: It is most likely that the 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. Subsequent 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.

As prices have broken certain important resistances and shows impulsive tendencies, we will now stick with the above count. And as mentioned earlier, once prices reach $1,025-45 levels we will look for any signs of reversal. There are signs of a turnaround, and prices convincingly risen in volumes and closed above $1,300 levels, which further reaffirms our wave count.

RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD are still 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 reversal in trend to bullish.

Therefore, buy Comex gold on dips to $1,275 with stop-loss at $1,266 targeting $1,330.

Supports are at $1,267, 1,255 and 1,210. Resistances are at $1,305, 1,337 and 1,367.

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

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