Comex gold futures crept higher as the dollar extended losses but investors were wary ahead of a meeting later in the day of the European Central Bank and the prospect of a US rate hike next week.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.72 percent to 863.67 tonnes on Wednesday from Tuesday.

Comex gold futures is seen consolidating in a broad range. As mentioned in the previous update, there is scope for prices to extend to lower levels. However, presently, it seems to have paused around $1,157 per ounce and have bounced higher from there. Resistances are seen at $1,185-95 levels now.

Bearish indications dominating the big picture charts still favour a fall to $1,145 levels. But, indicators are slowly turning positive even though the underlying trend continues to be bearish. This could take the price up towards $1,185-90 levels or even higher.

Push above $1,205 would open the way for $1,230 or even higher to $1,245. Supports near $1,168/70 could hold dips. It has to fall below $1,160 to warn about the possibility of failure of this view.

Only a daily close above $1,235 in good volumes could again revive bullish hopes and such a rise will hint that the downward correction has ended and the rally higher above $1,400 levels has begun. Favoured view expects prices to pull back higher and then decline lower again, but one should be ready to abandon the bearish view if prices cross above $1,235 levels.

Wave counts: It is most likely that the fall from 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 $1,375 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.

As prices have broken certain important resistances and shows impulsive tendencies, we will now stick with the above count. And as mentioned earlier, once prices reach $1,025-45 levels we will look for any signs of reversal. There are signs of a turnaround, and prices convincingly risen in volumes and closed above $1,300 levels, which further reaffirms our wave count.

RSI is in the oversold zone now indicating that an upward correction is in the offing. The averages in MACD are still below the zero line of the indicator again, indicating a bearish reversal. Only a cross over again above the zero line could hint at a reversal in trend to bullish.

Therefore, buy Comex gold on dips to $1,165-70 with stop-loss at $1,155 targeting $1,195-1,205.

Supports are at $1,160, 1,145 and 1,127. Resistances are at $1,200, 1,235 and 1,255.

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

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