Comex gold futures edged up on Thursday and extended its biggest one-day rally in nearly a year, as uncertainty over the outlook for Donald Trump’s US presidency rattled stock markets, prompting a wave of risk aversion. Comex gold futures moved in line with our expectations. As mentioned earlier, prices have hit an important support around $1,210-15 and a possible intermediate bottom being formed, as it has bounced higher from there.

Prices bounced higher, exactly as anticipated. It has broken certain key levels, but strong resistances ahead might continue to weigh on prices. Should the political storm that has been underpinning the gold rally die down, it could result in a potential sell-off and the rally could lose steam. And for this reason we see prices finding strong resistances ahead. However, if prices manage to close above $1,272, a greater upside towards $1,285 can be seen.

Favoured view expects prices to push higher initially towards resistances mentioned above and then to edge lower again towards $1,245.

Only an unexpected decline below $1,230 could hint at a resumption of the downtrend. Such a move could take prices lower towards $1,195, which is not our favoured view now.

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 the all-time highs 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 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 $1,375 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. But, failure to follow-through above $1,355 has dashed any hopes of any impulsive up move. As prices have broken certain important supports and shows weakness targeting $975 , we are tilted towards looking at this as a corrective wave “C” in progress. RSI is in the neutral zone now, indicating that it is neither overbought nor oversold.

The averages in MACD are below the zero line of the indicator again, indicating a bearish reversal.

Only a cross over again above the zero line could hint at a reversal in trend to bullish.

Therefore, Sell Comex gold around $1,268-70 with stop loss at $1,289 targeting $1,245 followed by $1,232. Supports are at $1,257, $1,245 & $ 1,231 and Resistances are at $1,271, 1,285 & 1,305.

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

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