Comex gold futures ruled higher on Thursday after the US Federal Reserve said it would take a “patient” approach in deciding when to raise interest rates even as the US economy strengthens. The statement from the Fed did not indicate any immediate hike, which bolstered the appetite for precious metals again.
Markets remain convinced the Fed will raise interest rates by next June and most participants expect further tightening of policy in the future. Physical demand should also support prices as a rebound in appetite from both India and China gathers momentum in the coming year.
India has removed curbs on imports comforted by falling crude oil prices offer, while the Chinese New Year demand could increase next month. The jitters of recent days also calmed as Russia managed to stabilise its rouble ahead of a year-end address by President Vladimir Putin, and oil prices steadied after one of the most turbulent spells in decades.
Comex gold futures moved higher as expected. As mentioned in the previous update, supports are now seen at $1,210 followed by $1,185 levels. It looks like an intermediate bottom has been put in place, and while supports hold, we expect prices to edge higher towards near-term resistances at $1,255. Prices came below $1,185 marginally before rising above $1,200 levels. Current price structures favour an upside move in gold futures.
A move above $1,239 could be the trigger for such a move to initial resistance at $1,255 followed by stronger resistance at $1,275-1,280 levels. Expect a push higher while supports in the above mentioned zone holds. Only an unexpected fall below $1,170 could revive bearish hopes. The coming weeks could see extreme volatility, as the holiday season begins and lower volumes could influence market movements.
The wave counts have to be revisited again. Fall below $1,250 has forced us to abandon any bullish hopes and look at a bearish one targeting $1,050. We felt the current set of moves from $1,175 to $1,435 is a corrective wave for in an impulse which began from the high of $1,920, with an equality target at $1,020.
However, there are many intermediate levels from where good retracement can be seen. The $1,035-1,070 could prove to be a good intermediate support. Ideally, from this area, a higher pullback towards $1,300 looks likely. If prices close above $1,220 we can safely assume that the declining impulse has ended and a new corrective one has begun.
Once we get more proof of the end of the present impulse, we will modify our counts in the next update. RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD have crossed over above the zero line of the indicator showing a possible bullish reversal. Another cross over below the zero line could hint at a bearish reversal again.
Therefore, look to buy Comex gold initially on dips to $1,190-1,192 stop loss $1,177 targeting $1,238 initially followed by $1,255.
Supports are at $1,200, $1,185 and $ 1,145 and resistances are at $1,240, $1,255 and 1,275.
The writer is the Director of Commtrendz Research and there is risk of loss in trading.