Comex gold futures were are higher on Thursday as investors cashed in on gains from the earlier rally to 12-week highs, as the Federal Reserve indicated it is still on course to raise interest rates this year, despite financial market volatility.

Comex gold futures moved perfectly in line with our expectations. As mentioned in the previous update, the technical picture is turning friendly for gold and a possible trend reversal is in the making, as prices have crossed certain important levels.

But, the medium-term picture still looks mixed and above $1,148 even that could start indicating a positive change for gold.

In the short-term though, the initial target at $1,120 has been met, but more important resistance is at $1,140-45 level, being a strong falling trend line resistance level. Supports are now seen at $1,109-10 followed by $1,085-90 levels now. Unexpected drop below $1,075 could cause doubts about this bullish expectation. And, below $1,045, more weakness is expected towards $1,020 or even lower to $975.

We favour supports to hold and prices to push higher again breaking key resistance levels.

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 its record peak at $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, to this decline, a corrective wave “B” could unfold with targets near $1,255 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 the key $1,140, we will now abandon this count. And as mentioned earlier, once prices reach $1,025-45 levels we will look for any signs of reversal.

As of now, there seems to be no major signs of turnaround, but momentum favours a short-term rally towards $1,140-45 levels. 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 near $1,107-08 with a stop-loss of $1,082 targeting $1,140-45 followed by $1,185.

Supports are at $1,108, 1,085 and 1,067 and Resistances are at $1,125, 1,147 and 1,185.

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

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