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Comex gold futures were higher on Thursday, as a recovery in Chinese share prices cooled fears of a wider rout in the major bullion consumer, and after minutes from the Federal Reserve’s last meeting suggested caution towards a near-term increase in interest rates.
Gold has been weighed down this year by expectations that the Fed will raise US interest rates for the first time in nearly a decade.
Comex gold futures moved lower perfectly in line with our expectations. As mentioned earlier, the bigger picture in gold suggests downside pressure in the coming weeks.
A close below $1,160-65 an ounce has opened the downside for gold futures. Resistances will be seen at $1,172-75 levels followed by $1,185 levels now.
Pullbacks to the above mentioned levels could come under pressure and prices could eventually retest the lows at $1,135 levels or even lower to $1,110.
Fall below $1,145 could hint at the beginning of a decline.
Such a move could take prices lower again towards $1,145 initially or even lower to $1,100. However, a convincing close above $1,205 accompanied by rising volumes could revive expectations of a move towards $1,257-60 levels, which is not our favoured view.
The wave counts need to be altered as prices move, but the overall trend looks weak and at present levels makes it difficult to take any directional call decisively. So, for now, we will stick to our previous assessment.
It is most likely that the fall from the all-time highs at $1,925 to the recent low of $1,130 was either a corrective wave “A” and a wave “B” is in progress with targets near $1,435 or even higher.
It is also possible that the entire corrective A-B-C got over and a new impulse is in progress targeting $1,527-30 or even higher in the medium-term. If prices do cross -over above $1,435, then we can settle for the latter. Till then it looks likely that prices could edge lower towards $1,050 levels.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold.
The averages in MACD have gone below the zero line of the indicator, indicating a bearish reversal in trend again. Only a cross over again above the zero line could hint at a bullish reversal.
Therefore, sell Comex gold on rallies to $1,170-75 with a stop-loss of $1,201 targeting $1,145 followed by $1,120.
Supports are at $1,145, 1,125 and 1,100. Resistances are at $1,175, 1,197 and 1,205.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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