Comex gold futures ended lower on Thursday as the dollar rose to a three-month high and the metal looked vulnerable to further losses after US Federal Reserve officials left the door open to a rate rise in December. A robust US jobs report on Friday could trigger another sell-off in gold, which is already facing weakness due to investor outflows. Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell to 680.11 tonnes on Wednesday, the lowest in six weeks.

Comex gold futures are moving against our expectations. As mentioned in the previous update, an unexpected fall below $1,140 an ounce could force us to abandon our bullish view. Such a fall could once again revive bearish expectations for a test of recent lows or even lower. As mentioned earlier, though gold futures still shows promise of crossing the important psychological resistance at $1,200, a possible decline to $1,145 could dash our bullish hopes. The technical picture has turned considerably weak ahead of the important data packed day. The $1,110-17 range, a critical support, has given way and this opens the door for a retest of recent lows at $1,077 or even lower to $1,045. Resistances will be seen strong at $1,117-20 levels in the short-term and stronger resistance is at $1,140 levels. While both the above resistances cap, favoured view expects a decline and retest recent lows or even lower. Unexpected rise above $1,124 could tone down the bearishness to some extent allowing a minor correction higher, which does not seem to last long.

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. RSI is in the neutral zone now indicating that it is neither oversold nor overbought. 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, sell Comex gold near $1,115-20 with a stop-loss of $1,141 targeting $1,078 followed by $1,045.

Supports are at $1,095, 1,077 and 1,045 and Resistances are at $1,120, 1,138 and 1,155.

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

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