Comex gold futures eased from three-week highs on Thursday as a recovery in the dollar prompted some profit-taking, but remained supported by fading expectations for a Federal Reserve interest rate hike.

The gold futures moved against our short-term expectations, but fell in line with our overall bullish view. As mentioned in the previous update, the weekly price structures still look healthy for the uptrend to gain momentum despite the current weakness.

As mentioned earlier, though the momentum is strongly bearish in the near-term, we favour prices to test important supports and push higher again. As cautioned earlier, a direct rise above $1,237 an ounce could cause doubts on our short-term bearish view, which could then see prices pushing higher towards $1,255 levels. Prices have risen towards $1,266.

Any dips to $1,245-50 look supportive in the near-term. The favoured view in the short-term still expects prices to find support around the $1,245-48 band followed by $1,237 and then edge higher towards important resistances around $1,285-87 levels in the coming week.

Only a direct fall below $1,232 could postpone the bullishness, which could then see prices consolidating in a range before pushing higher again.

Wave counts: 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 $1,375 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 as a fourth wave, then the fifth wave could begin and cross $1,700 in the long-term.

As mentioned earlier, once prices reach $1,025-45 levels we will look for any signs of reversal.

There are signs of a turnaround, and prices need to convincingly rise above $1,300 levels and close above it, which has not happened so far. RSI is in the neutral zone now indicating that it is neither overbought nor oversold.

The averages in MACD have gone 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 on dips to $1,245-48 with a stop-loss at $1,232 targeting $1,285.

Supports are at $1,245, 1,220 and 1,195 and Resistances are at $1,285, 1,305 and 1,355.

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

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