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Comex gold futures were lower on Thursday, near three-week lows as the dollar jumped on expectations the Federal Reserve could end its bond-buying programme this fall, hurting the metal's haven appeal. Janet Yellen, speaking at her first news conference as the Fed chief after the close of the US central bank's two-day policy meeting, said the Fed could start to raise interest rates around six months after its current asset purchase programme ends. The Federal Reserve's decision to further taper its gold-supportive bond buying programme by $10 billion and raise interest rates possibly sooner than the market expected, could weigh on prices.
Comex gold futures moved up as expected but could not sustain and follow-through higher which resulted in a sell-off. As cautioned, a fall below $1,343 could see prices declining to next important support at $1,320 levels. The dip below $1,343 got stronger than expected. Prices could now be inclined to test supports at $1,312/13 followed by important one at $1,285. It has to climb above $1,342 to restore some bullishness. We can initially expect $1,310-13 to hold for a pullback towards $1,340-43 levels. Failure to cross this resistance could accelerate the fall towards $1,300 or even lower subsequently.
The wave counts have been modified once again. This happens most of the times with Elliot wave analysis, and tends to be confusing to lay investors following this concept. However, despite this short-coming this is one of the best forecasting techniques in existence. We will now go with the alternative wave counts that we have considered broadly in our earlier updates. From the peak of $1,920 a corrective decline in the form of “A-B-C” is already over at $1,181 and a new impulse has begun. Confirmation of such an impulse will be seen above $1,445. RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD are still above the zero line of the indicator hinting at bullish to be intact.
Therefore, immediately, one can look to buy gold on dips to $1,310/12 with a stop loss at $1,298, targeting $1,340. Or look to sell gold near $1,340-45 with a stop loss at $1,357, targeting $1,295.
Supports are at $1,313; $1,298 and $1,285. Resistances are at $1,342; $1,363 and $1,380.
The author is the Director of Commtrendz Research. There is risk of loss in trading.
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