Comex gold futures were lower on Thursday, as the dollar rose to a nine-year high following the release of minutes from the Federal Reserve’s last meeting and steadier oil prices soothing risk aversion, which drove gold prices higher from recent lows. Markets are awaiting the release of US non-farm payrolls data for December on Friday, a key barometer of the health of the US economy. An upbeat report is likely to support the view that the Fed will raise rates sooner rather than later.

Comex gold futures moved higher against our expectation. Gold futures are once again trying to consolidate above the $1,200/ounce-mark. The chart picture has turned neutral now and if the price crosses certain important resistance, there could be a bullish turnaround in the offing. Price structures are indicating mild strength and a possible turnaround, if it stays above $1,292-94 levels now. Critical support is at $1,180-82, below which picture could weaken again. Failure to sustain and follow-through higher could again indicate a sign of weakness. Fall below $1,180 will trigger a bearish move in gold. Such a move could take prices lower to supports at $1,154 followed by the recent low at $1,131. Further decline to $1,100 levels also looks likely subsequently. Strong resistance will now be seen at $1,227-28 followed by $1,233-38 levels now. Expects prices to hold supports and gently edge higher above resistances mentioned above.

The wave counts have to be revisited again. Fall below $1,250 has forced us to abandon any bullish hopes and look at a bearish one targeting $1,050. We feel the current set of moves from $1,175 to $1,435 is a corrective wave four in an impulse which began from the high of $1,920, with a equality target at $1,020. However, there are many intermediate levels from where good retracement can be seen. The $1,035-70 could prove to be a good intermediate support. Ideally, from this area, a pullback higher towards $1,300 looks likely. If prices close above $1,255 we can safely assume that the declining impulse has ended and a new corrective one has begun. The move to $1,238 was in the form of three waves denoting a corrective move upwards within a declining impulse. RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD have gone above the zero line of the indicator, indicating a possible bullish reversal now. A cross over again below the zero line could hint at bearishness.

Therefore, look to buy Comex gold on dips to $1,195-97 with a stop-loss of $1,179 targeting $1,237 initially followed by $1,274.

Supports are at $1,195, 1,180 and 1,155. Resistances are at $1,237, 1,255 and 1,274.

The author is the Director of Commtrendz Research and there is risk of loss in trading.

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