Comex gold futures fell on Thursday, extending losses for a third day after comments from Federal Reserve Chairman Jerome Powell this week shored up expectations for further increases to US interest rates and held the dollar near a five-week peak.

Comex gold futures are edging lower, but hasn’t fallen as much as the other non-agri commodity peers. As mentioned in the previous update, prices could now consolidate in the $1,300-1,320 per ounce levels before edging up again.

A round of consolidation in the $1,305-1,335 zone looks likely for a while. In the near-term, upticks could be capped in the $1,335-45 zone and edge lower towards initial support at $1,300-05. And failure to hold here could take it down to $1,278-80. The medium-term picture still holds some promise, therefore, caution should be exercised on getting excessively bearish too.

A positive trigger for a sustaining the uptrend is likely to be above a close of $1,375. In the coming week, we expect $1,300-05 levels to hold for a push higher towards $1,335 or even higher to $1,365 levels subsequently.

Wave counts: It is most likely that the fall from 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.

But, failure to follow-through above $1,355 has dashed any hopes of any impulsive up move. As prices have broken certain important supports and shows weakness targeting $1,100 levels. But, a sustained move above $1,200 has once again revived bullish hopes and will make the necessary adjustments to the wave counts, as the prices break key resistance above.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still above the zero line of the indicator again, indicating bullishness to be intact. Only a cross over again below the zero line could hint at a reversal in trend to bearish.

Therefore, buy Comex gold on dips around $1,300-05 with the stop-loss at $1,297 targeting $1,345 followed by $1,374.

Supports are at $1,305, 1,295 and 1,278. Resistances are at $1,335, 1,351 and 1,374.

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

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