Comex gold futures were higher on Thursday after meeting minutes from the US Federal Reserve suggested policymakers were in no hurry to raise interest rates. Comex gold futures pulled back higher as expected.

As mentioned in the previous update, a break above the near-term resistance could likely see a minor pullback towards $1,125-26 an ounce levels in a corrective rebound. Rise above $1,109 triggered a sharp rise as anticipated, possibly short-covering and profit-booking coupled with some bargain hunting. However, even after the present rally, the up move does not look convincing enough. Strong resistance is seen between $1,145 and 1,155 levels. The present move looks like an upward correction within a downtrend. Only a convincing close above $1,155 accompanied by rising volumes could turn the picture to neutral again.

Such a move could see prices edging higher towards $1,167-70 levels, with chances of even extending to $1,185. As of now, the present up move has the potential to stretch further towards strong resistances at $1,145-55 levels. Supports are expected around $1,123-25, followed by $1,110 levels.

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 still below the zero line of the indicator, indicating a bearish reversal in trend again. Only a cross over again above the zero line could hint at a bullish reversal.

Therefore, buy Comex gold on dips to $1,125 with a stop-loss of $1,109 targeting $1,155 followed by $1,167.

Supports are at $1,125, 1,109 and 1,075. Resistances are at $1,155, 1,167 and 1,185.

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

Published on August 20, 2015