Buy Comex gold if it dips to $1,065/ounce

Comex gold futures moved in a narrow range on Thursday, ahead of a widely anticipated US interest rate hike next week, with even a slump in the dollar failing to trigger interest in the metal.

Comex gold futures moved in line with our expectations. As mentioned in the previous update, caution needs to be exercised on getting excessively bearish. We have been hinting at $1,045 for some time.

With a bounce to almost $1,090 from the lows of $1,045, there are promising signs that we have possibly seen a bottom.

However, only on a close above $1,100 can a trend reversal be expected. Also, as mentioned earlier, an unexpected rise above $1,076 could tone down the bearish picture in the medium-term; presently prices are consolidating around these levels.

But, for long-term investments in gold, these levels could be attractive, even though there is a possibility of a further downside. Below $1,045, more weakness is expected towards $1,020; even lower to $975.

As mentioned in the previous update, chances of a reversal are quite high. We now favour the break higher above the consolidation range of $1,065-1,080. A trigger for such a move would be a close above $1,085.

We will take a look at the wave counts and understand the possible scenarios that may unfold.

It is most likely that the fall from the all-time high at $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. As prices have broken the key $1,140-level, we will now abandon this count.

As mentioned earlier, in the short-term, prices are likely to be under pressure and could edge lower towards $1,025-45 levels.

Once prices reach the levels mentioned or with any sign of a reversal, we can take a fresh directional call.

RSI is in the oversold zone now, indicating that a possible upward correction can be seen.

The averages in MACD are below the zero line of the indicator again, indicating bearishness to be intact. Only a cross over again above the zero line could hint at a reversal in trend to bullish.

Therefore, Buy Comex gold if it dips to $1,065; stop loss at $1,045 targeting $1,100, followed by $1,125.

Supports are at $1,065; $1,045 and $1,020; while Resistances are at $1,085; $1,105 & 1,120.

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

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