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Comex gold futures edged higher on Thursday, back towards the previous day's two-month lows, but remained stuck in the recent narrow range after the minutes of the US Federal Reserve's latest monetary policy meeting showed no consensus on the likely pace of interest-rate hikes.
Comex gold futures are moving perfectly in line with our expectations so far. As mentioned earlier, the technical picture is turning neutral to bearish in the short-term and support levels around $1,231 and $1,210 are expected to be tested in the coming sessions.
Strong resistance will be seen at $1,236-38 followed by a stronger one at $1,250-52. The price could either initially test resistances and edge lower again or a direct fall below $1,215 could push prices lower towards $1,195 or even lower in the coming sessions. An unexpected rise and close above $1,260 could cause doubts on our bearish expectations. The favoured view expects prices to edge lower towards the supports mentioned above.
The trigger for such a decline below $1,215 could hint at a resumption of the downtrend. The bullish view we have been having so far seems to be slowly diminishing and it appears now that a further downside can be expected.
Wave countsIt is most likely that the fall from the all-time highs at $1,925 to the recent low of $1,088, was either a possible corrective wave A, with a possibility to even extend towards $1,025-30 levels or a complete correction of A-B-C ending with this decline.
Subsequent 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.
As prices have broken certain important supports and shown 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 MACD averages have gone below the zero line of the indicator again, indicating a bearish reversal.
Only a crossover again above the zero line could hint at a reversal in trend to bearishness.
Therefore, sell Comex gold on rallies to $1,235-37 with a stop-loss at $1,252 targeting $1,210, followed by $1,195.
Supports are at $1,215, $1,195 and $ 1,177. Resistances are at $1,235, 1,251 and 1,265.
The writer is the Director of Commtrendz Research. There is risk of loss in trading .
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