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Comex gold futures sank to a five-week low on Thursday and analysts expect more losses as investors become more certain that US interest rates will rise later in the month.
Comex gold futures fell lower against expectations. A direct fall below $1,235 could, however, see the next support at $1,220 being tested again. And, only a failure to hold here could have more bearish implications.
The $1,220 level could become a strong resistance point going forward and could cap upside attempts in the coming sessions. A fall below $1,205 has opened the downside for $1,190-93.
However, we feel strong supports emerging around those levels, failing which stronger supports are noted around $1,173-75. We still maintain our broader bullish view in the long-term. And the current fall to recent lows could once again be an opportunity to do some bottom picking in 2017.
The favoured view expects prices to initially find support around the levels mentioned above and edge higher from there. Only an unexpected fall below $1,190 could hint at weakness once again.
We will take a look at the wave counts now and understand the possible scenarios that can unfold going forward. It is most likely that the fall from 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 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. Alternatively, we can also expect wave ‘B’ to extend to $1,476 .
If the current decline as a whole from $1,920 can be considered a fourth wave, then the fifth wave could begin and cross $1,700 in the long-term.
RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD have gone above the zero line of the indicator again, indicating a bullish reversal. Only a crossover again below the zero line could hint at a reversal in trend.
Therefore, buy Comex gold around $1,190-93 with a stop loss at $1,182 targeting $1,220 followed by $1,245.
Supports are at $1,195, $1,176 and $1,145 and resistances are at $1,220, 1,237 and 1,265.
The writer is the Director of Commtrendz Research. There is risk of loss in trading .
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