Comex gold futures were sharply lower on Thursday as the dollar rose to a nine-month high against a basket of currencies and the stock markets strengthened further denting gold’s appeal for investors.
A run of upbeat US data has highlighted the diverging economic outlook for the euro zone and the US. Expectations are growing that the Federal Reserve will begin tightening rates early next year.
Comex gold futures are lower in line with our expectations.
As mentioned in the previous update, prices could be eventually breaking lower and heading towards recent lows at $1,180 an ounce levels.
Prices are expected to gradually inch towards $1,185-1,200 levels, being a crucial trend line resistance support point.
A close below $1,175 should open the downside for an even sharper move lower towards $1,050 levels in the bigger picture.
Only a close above $1,237 could cause doubts on our bearish view.
Such a rise could take prices higher towards $1,240-45, or even higher to $1,260. Favoured view still expects prices to get capped in the $1,235-40 range and decline again towards levels mentioned above.
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 fell the present set of moves from $1,175 to $1,435 is a corrective wave four in an impulse which began from the high of $1,920, with a equality target at $1,020.
Ideally, from this are a pullback higher towards $1,300 looks likely.
RSI is in the oversold zone now indicating a possible upward correction or a retracement in the offing.
The averages in MACD are still below the zero line of the indicator indicating a bearish reversal.
Only a cross over again above the zero line could hint at a possible bullish reversal again.
Therefore, look to sell gold on rallies to $1,230-35 zone with a stop loss at $1,245 targeting $1,200 and 1,175.
Supports are at $1,200, 1,175 and 1,145. Resistances are at $1,235, 1,245 and 1,265.
The writer is the Director of Commtrendz Research and there is risk of loss in trading