Buy Comex gold if it touches $1,070 per ounce

Comex gold futures were higher on Thursday after the Federal Reserve flagged a rate hike next month, but also an intention to take things slow and steady after that.

The dollar fell back from seven-month peaks against a basket of currencies early in Asia on Thursday. Expectations for a rate rise have been a major factor pushing gold prices down 9 per cent this year.

Comex gold futures moved in line with our expectations. As mentioned in the previous update, while resistances at $1,115 an ounce caps, favoured view expected a decline and retest recent lows or even lower. Prices have declined as expected, and went as low as $1,064 and pulled back higher from there. Prices do not exhibit a clear bottom yet.

A close above $1,087 could hint at a possible bottoming and follow-through higher from there towards $1,105 could further reaffirm that an intermediate bottom has been put in place. However, failure to follow-through higher above $1,087 could put prices once again at the danger of heading lower towards $1,045 levels, which we have been anticipating for a while now.

Only an unexpected rise above $1,124 could tone down the bearish picture in the medium-term. Favoured view expects a short-term bounce, while supports at the recent lows of $1,065 holds.

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 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.

As prices have broken the key $1,140, we will now abandon this count. And as mentioned earlier, in the short-term though, prices are likely to be under pressure and could edge lower towards $1,025-45 levels.

Once prices reach these levels mentioned above or any signs of a reversal, we can take a fresh directional call. But, so far there are no such signals.

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 a bearish reversal. Only a cross over again above the zero line could hint at a reversal in trend to bullish.

Therefore, buy Comex gold near $1,070 with a stop-loss of $1,061 targeting $1,085 followed by $1,105 .

Supports are at $1,070, 1,045 and 1,025. Resistances are at $1,085, 1,105 and 1,125.

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

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