Comex gold futures climbed to their highest level in over a week on Thursday after the US central bank signalled only a gradual rate tightening, although the election defeat of a Dutch far-right candidate dampened appetite for gold as a safe haven.

Comex gold futures moved perfectly in line with our expectations. Though prices have fallen, the $1,190-93 zone could hold and the price could bounce higher from there. In the bigger picture, we still maintain our broader bullish view of gold in the long-term.

And the current fall to recent lows could once again be an opportunity to do some bottom picking in 2017.

Consolidation possible

The near-term resistance is at $1,236/37. Sentiment could get dented if prices find it difficult to cross this near-term resistance, which could lead to a round of consolidation before rising higher again.

On the contrary, failure to rise in the short-term could lead to a sharper decline subsequently. Such a fall could see prices testing $1,205-10 again or even lower.

However, a direct rise and close above $1,236 can open the way for further highs towards $1,275-80.

The favoured view expects prices to initially find support around the levels mentioned above and gradually edge higher from there.

Only an unexpected fall below $1,196 could hint at weakness once again.

Wave counts

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 all-time high at $1,925 to the recent low of $1,088 was either a possible corrective wave ‘A’, with a possibility to even extend towards $1,025-30 or a complete correction of A-B-C ending with this decline.

Subsequent to this decline, a corrective wave ‘B’ could unfold with targets near $1,375 or even higher.

After that, a wave ‘C’ could begin lower again. Alternatively, we can 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.

But, failure to follow-through above $1,355 has dashed any hopes of any impulsive up move.

As the price has broken certain important supports and shows weakness targeting $975, we are tilted towards looking at this as a corrective wave ‘C’ in progress.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are above the zero line of the indicator again, indicating a bullish reversal.

Only a crossover again below the zero line could hint at a reversal in trend to bullishness.

Therefore, Buy Comex gold around $1,210-15 with a stop loss at $1,196 targeting $1,237 followed by $1,275.

Supports are at $1,210, $1,196 & $ 1,170 and Resistances are at $1,237, 1,265 & 1,288.

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

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