Comex gold futures ended lower on Thursday as the dollar strengthened ahead of key US economic data. Gold prices could be further undermined as physical demand is weak in Asia.

Comex gold futures moved perfectly in line with our expectations.

As mentioned in the previous update, prices failed to close above $1,225/oz and the subsequent fall below $1,202 has dented the bullish sentiment. We saw a break below $1,170, but it did not get sold off as expected. Very strong support is seen near $1,160-70 levels now.

Only a close below $1,160 could clearly revive bearish expectations again. Such a move could take prices lower again towards $1,141 or even lower to $1,100. But, since the $1,160-70 support has been holding strongly for the past three months, chances also exist for this level to hold support once again. So, one has to watch this levels closely before getting bearish.

As cautioned earlier, though the short-term charts are still looking neutral to bullish, the big picture still does not hold any major promise for a rally higher.

Favoured view now expects rallies to $1,185-95 to get capped for a sharp decline. However, only a convincing break above $1,215 could once again make us to rethink our bearish 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.

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 $1,185-90 with a stop-loss of $1,206 targeting $1,147 or even lower to $1,125.

Supports are at $1,170, 1,145 and 1,125. Resistances are at $1,195, 1,215 and 1,245.

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

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