Comex gold futures retreated on Thursday after rising the most since late April. But expectations that the US Federal Reserve is unlikely to raise interest rates at its next meeting in June, should help gold find strong support.

Downplaying of the probability of a Fed rate hike in June should give gold a lift till the end of this quarter, although the anticipation of a possible hike in September is likely to weigh on the metal. Comex gold futures are moving in line with expectations. As mentioned previously, chances for a break above $1,300 levels still look good. A daily close above $1,300 should open the way for potential targets around $1,351, followed by $1,378 levels now.

But, prices could not sustain above $1,300, thus denting confidence of the bulls. Weekly price structures still look healthy for the uptrend to gain momentum. The chart picture has not shown any major bearish indications, and it looks more like a healthy correction within a sustained bullish trend. While $1,255-60 holds attempts to decline, we expect prices to edge higher again above $1,300. However, an unexpected fall below $1,256 could hint

at bearishness. Such a move could push prices lower towards $1,210-15 levels, which we do not favour presently. Favoured view in the short-term still expects prices to find supports on dips to around $1,260-65 and then move higher again. Only a direct fall below $1,256 could dash our bullish hopes.

We will take a look at the wave counts. It 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.

Subsequently, 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 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 certain important resistances and shown impulsive tendencies, we will stick to the above count. As mentioned earlier, once prices reach $1,025-45 levels, we will look for signs of reversal.

RSI is in the neutral zone indicating it is neither overbought nor oversold. Averages in MACD are still above the zero line of the indicator indicating a bullish reversal. Therefore, Buy Comex gold on dips to $1,260-65; stop loss at $1,249 targeting $1,295, followed by $1,325.

Supports are at $1,257; $1,245; $1,215 and Resistances are at $1,300; 1,325; 1,357.

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

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