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Comex gold futures were higher on Thursday after the Federal Reserve indicated after a two-day policy meeting that US interest rates may rise more slowly than expected, knocking the dollar. Markets could also keep an eye on developments related to the Greek debt crisis which could further bolster the bullion complex.
Comex gold futures are staging a recovery after many failed attempts to break near-term key support levels. As mentioned in the previous update, we saw a break below $1,170 an ounce, but it did not get sold off as expected. Very strong support was seen near $1,160-70 levels and also since the $1,160-70 support has been holding strongly for the past three months, chances existed for this level to hold support once again. Prices are inching higher towards $1,205 levels initially and a successful close above here could lead prices further higher towards $1,220-25 levels now. Supports are now seen at $1,185-90 levels.
Favoured view now expects rallies to $1,205 followed by $1,220-25 to be tested in the coming sessions. However, only a convincing close above $1,234 could revive expectations of a move towards $1,257-60 levels. 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.
It is most likely that the fall from the record $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 $1,172 targeting $1,205 followed by $1,225.
Supports are at $1,185, 1,170 and 1,145. Resistances are at $1,205, 1,225 and 1,257.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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