Comex gold futures were lower on Thursday, due to stronger dollar and as investors awaited a key US jobs report to gauge the timing of a Federal Reserve rate hike. Comex gold futures are moving in a broad range consolidating before the next move.

As mentioned in the previous update, the drop from resistance levels has been sharp and casts doubts on our overall bullish view. Failure to cross $1,165-70 an ounce levels, the long-term resistance and repeated failure to cross $1,150 in the past sessions, is seen as a sign of weakness. An important support zone lies at $1,109-10 levels. While, this support holds, we can expect a push higher again.

However, the present strong resistance around $1,147-55 needs to be crossed in good volumes to confirm the continuance of the mild bullish trend towards next resistances at $1,195 levels. This is our favoured view.

As of now, there is possibility for prices to extend higher while supports hold. Unexpected decline below $1,105 could dash our bullish hopes and turn the picture neutral. Such a move could once again bring the focus back on recent lows. Strong resistance is seen at $1,145-55 range in this week and $1,195 subsequently.

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 the record $1,925 to the recent low of $1,088 so far, was either a possible corrective wave “A”, with a possibility to even extend towards $1,025-30 levels or a complete correction of A-B-C ending with this decline.

Subsequently, to this decline, a corrective wave “B” could unfold with targets near $1,255 or even higher. After that, a wave “C” could begin lower again.

Alternatively, we can also 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. We are more inclined to go with this as a favoured scenario.

If prices do cross-over above $1,435, then this possibility will be confirmed. In the short-term though, prices are likely to be under pressure and could edge lower towards $1,025-45 levels.

RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD are above the zero line of the indicator, indicating a bullish reversal in trend again. Only a cross over again below the zero line could hint at bearishness.

Therefore, buy Comex gold on dips to $1,110-12 with a stop-loss of $1,099 targeting $1,155 followed by $1,185.

Supports are at $1,120, 1,109 and 1,085. Resistances are at $1,145, 1,165 and 1,185.

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

Published on September 3, 2015