Comex gold futures ruled lower on Thursday, retreating from two-month high, as investors awaited the release of the latest monthly employment report in the US. Downside risk is looming large for gold prices, should the employment report come out stronger than expected.

Ahead of a long weekend if the numbers come in higher than expected a good profit-taking is likely. However, with violence continuing in Iraq and Ukraine, traders still have reason to buy the precious metal. Some investors see gold as a hedge against political and economic uncertainty, believing it will hold its value while other assets fall.

Comex gold futures moved higher in line with expectations. As mentioned in the previous update, price structures favour a rise towards $1,297/ounce followed by $1,305 or maximum to $1,330. Also, as illustrated in the previous update, though the underlying trend remains bearish, prices are hinting at a possible bullish reversal.

Price structures are hinting at short-term weakness now. Prices could drift to $1,310/15 levels initially followed by critical support at $1,305 levels. Below here prices could aim for another important support at $1,275-85 zone. While this zone holds attempts to decline, we expect prices to eventually breakout above the key resistance at $1,335/38 then targeting $1,355 or even higher. Only a fall below $1,264 could forces us to abandon our bullish view.

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. Fall below $1,250 could now force us to abandon this scenario and look at a bearish one targeting $1,095.

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 hinting at a bullish reversal. Only a cross over below the zero line again could hint at bearishness again.

Therefore, look to buy gold on dips to $1,305-10 zone with a stop loss at $1,283 targeting $1,339 followed by $1,355.

Supports are at $1,315, 1,285 and 1,265, while resistances are at $1,339, 1,355 and 1,375.

(The author is the Director of Commtrendz Research and also in the advisory panel of Commodity exchanges and corporate houses. The author is not liable for any loss or damage, including without limitations, any profit or loss which may arise directly or indirectly from the use of above information.)

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