Buy gold if it touches $1,078-82/ounce

Gnanasekaar T | Updated on January 19, 2018 Published on January 07, 2016

Gold jewellery is seen displayed for sale at a shop in a gold market in Basra, southeast of Baghdad February 14, 2015. Picture taken February 14, 2015. REUTERS/ Essam Al-Sudani (IRAQ - Tags: SOCIETY BUSINESS COMMODITIES)

Comex gold futures were higher on Thursday hitting a two-month high as the dollar fell and traders moved money into safer assets like bullion, as worries over the Chinese economy hit global stocks.

Comex gold futures moved perfectly in line with our expectations. As mentioned in the previous update, the consolidation still continues and our favoured view still continues to expect a move higher, and while supports around $1,055-60 holds, we favoured prices to edge higher towards resistances around $1,095-97 followed by $1,120 levels.

A possible trend reversal is in the making, as prices have crossed certain important levels. But, the medium-term picture still looks mixed.

It is likely that we will see prices consolidating in range between $1,080-85-$1,105 before pushing higher towards $1,120 followed by an important resistance at $1,140-45 level. Supports are seen at $1,080-85 followed by $1,070 levels now.

However, below $1,045, more weakness is expected towards $1,020 or even lower to $975. It is most likely that the fall from the record high 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.

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

Therefore, buy Comex gold near $1,078-82 with a stop-loss of $1,067 targeting $1,120 followed by $1,140. Supports are at $1,085 $ 1,067 & $1,045 and Resistances are at $1,105, 1,120 & 1,145.

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

Published on January 07, 2016

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