Sell gold if it rallies to $1,097/oz

Comex gold futures were flat on Thursday, as the dollar steadied and investors awaited US employment data that could bolster prospects of the Federal Reserve raising interest rates as early as next month.

US non-farm payrolls that are due on Friday, markets expect employment in July to increase at the same pace as June.

Comex gold futures are moving perfectly in line with our expectations.

As mentioned earlier, resistances will be seen at $1,100-15 per ounce levels and pullbacks to the above mentioned levels could come under pressure and prices could eventually retest the lows at $1,075 levels or even lower to $1,045.

Can prices reverse from $1,045 levels? Technically, an equality target is seen at $1,020-25 and another important one comes at $925.

However, it does not mean that the above mentioned equality targets might necessarily be tested.

Our favoured view expects the confluence point near $1,025-45 range to hold any attempts to decline and the prices moving up in a correction from there.

Trigger for the decline will be on a break below $1,076 now. However, only a convincing close above $1,145 accompanied by rising volumes could turn the picture to neutral again. Also, a break above the near-term resistance at $1,110 could likely see a minor pullback towards $1,125-26 levels in a corrective rebound from where it could fizzle out again.

It is most likely that the fall from the record $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 levels 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 $1,255 or even higher. After that, a wave “C” could begin lower again.

Alternatively, we can also expect wave “B” to extend to $1,476 levels. 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. We are more inclined to go with this as a favoured scenario. If prices do cross-over above $1,435, then this possibility will be confirmed.

In the short-term though, prices are likely to be under pressure and could edge lower towards $1,025-45 levels.

RSI is in the oversold zone now indicating a possible upward correction in the offing.

The averages in MACD are 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 $1,097 with a stop-loss of $1,112 targeting $1,045 followed by $1,020.

Supports are at $1,078, 1,045 and1,020. Resistances are at $1,110, 1,125 and 1,160.

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

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