Comex gold futures held near 3-month highs on Thursday as political risks from elections in Europe and worries over US President Donald Trump’s policies buoyed haven demand for bullion.

Comex gold futures moved perfectly in line with expectations. Prices broke out of the $1,215-20 per ounce zone and from there it has been acting as a strong support.

Taking out the near-term highs at $1,220 has increased the chances of this price rally extending to the next resistance in the $1,235-40 zone.

Prices have hit $1,243 so far and it looks like this trend could continue towards $1,260-65 levels in the coming sessions.

A daily close above $1,225 could again revive bullish hopes and such a rise will hint that the downward correction has ended, and one should be ready to abandon the bearish view if prices close above $1,225 levels.

With the dollar still looking weak, the favoured view now expects support in the $1,220-25 zone to hold dips if any.

Though the $1,240-45 zone is a strong one to cross in the near term, chances exist for an extension even to $1,265-75 eventually.

Supports are seen at $1,235 followed by $1,220 levels now.

We still maintain our broader bullish view of gold 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 edge higher towards the resistance mentioned above. Only an unexpected fall below $1,190 could hint at weakness once again.

Wave counts: It is most likely that the fall from the record $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 also expect wave “B” to extend to $1,476 levels.

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. But, failure to follow-through above $1355 has dashed any hopes of any impulsive up move.

As the price has broken certain important supports and shows weakness targeting $975, we are tilted towards looking at this as a corrective wave “C” in progress.

RSI is in the neutral zone now 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 to bullishness.

Therefore, buy Comex gold around $1,220-25 with a stop-loss at $1,205 targeting $1,260 followed by $1,278.

Supports are at $1,220, 1,200 and 1,185. Resistances are at $1,260, 1,278 and 1,310.

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

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