Comex gold futures sank to a fresh one-year low on Thursday as the dollar powered higher following comments from the US Federal Reserve Chairman Jerome Powell which reaffirmed expectations for more interest rate rises in the world’s largest economy.

Comex gold futures have moved in line with our expectations. As mentioned in the previous update, the recovery seems to have stalled and prices are threatening to test recent lows once again. Failure to hold support at $1,235 an ounce has pushed prices lower. It is most likely headed to $1,203 or even lower to $1,195 from where a major recovery could begin once again. A positive trigger for the medium-term in sustaining the uptrend is likely to be above a close of $1,335 . In the short-term, we expect prices to range in $1,1965-1,275 or even extend to $1,289-90. Only a close above $1,305 could revive bullish hopes . In the coming sessions, crucial support will come into play around $1,195 and we expect prices to stabilise and reverse higher from there.

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 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 . 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. An eventual break above $1,355 could see the Wave “B” scenario emerge in the coming sessions. While $1,270 holds, we still favour prices rising higher towards $1,450-75 in the form of wave “B”. We will re-assess around $1,450-70 on the potential for a wave “C” decline subsequently.

RSI is in the oversold zone hinting at a upward correction in the offing before more declines can be seen. The averages in MACD are gone below the zero line of the indicator again, indicating a bearish reversal.

Only a crossover above the zero line could hint at a bearish reversal in trend.

Therefore, buy Comex gold around $1,198-1,203 with the stop-loss at $1,186 targeting $1,235 followed by $1,248. Supports are at $1,205, 1,195 and 1,178. Resistances are at $1,235, 1,248 and 1,270.

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

comment COMMENT NOW