Commodities

Buy gold if it hits the 1,200 mark

Gnanasekaar .T | Updated on August 02, 2018 Published on August 02, 2018

Comex gold futures held steady on Thursday after an upbeat assessment of the US economy by the Federal Reserve and new trade tensions between Washington and Beijing boosted the dollar and US bond yields.

Comex gold futures moved as expected.As expected We saw prices testing $1,235 an ounce and failing to follow-through higher. This has been a regular feature for gold lately. However, we could be coming close to an intermediate bottom around $1,194-$1,200 in the coming sessions. We expect either a turnaround or a strong pull-back from those levels.

As we have been maintaining for a while, the medium-term picture still holds some promise, therefore caution should be exercised on getting excessively bearish too. From the bottom at $1,045 in December 2015, prices have been makinghighs , a clear sign of a rising trend that has made us believe the bigger picture to be supportive despite strong corrective declines from time to time. A positive trigger for the medium-term in sustaining the uptrend is likely to be above a close of $1,335 levels. In the short-term, we expect prices to be range in the $1,195-1,275 range or even extend to $1,289-90 where strong good resistances can be seen again. Only a close above $1,305 in the bigger picture could revive bullish hopes once again for $1,335 or even higher. In the coming sessions, crucial support will come into play around $1,195-1,200 levels and we expect prices to stabilise and reverse higher from there towards $1,248 or even higher. Unexpected fall below $1,194 could dent this mildly bullish view.

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 coming sessions. While $1,270 holds, we favour prices rising towards $1,450-75 in the form of wave “B”. We will re-assess at $1,450-70 levels on the potential for a wave “C” decline subsequently.

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

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

Therefore, buy Comex gold around $1,195-1,200 with a stop-loss at $1,178 targeting $1,235 followed by $1,248. Supports are at $1,215, 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.

Published on August 02, 2018
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