Comex gold futures were lower on Thursday, with the Federal Reserve viewing the recent slowdown in the US economy as transitory, not ruling out an interest rate hike this year.

The Fed downgraded its view of the US labour market and economy after its two-day policy meet and said the poor performance was in part due to transitory factors. Markets will now be watching more upcoming US data to gauge how it would affect the Fed’s timing regarding interest rates.

Comex gold futures are moving in a broad range. As mentioned earlier, mild bullish indication in prices, hints at a possible move towards near-term resistance around $1,225-levels. But, the critical thing for prices is that it is unable to follow through higher, which could once again lead to weakness in sentiment.

Only a successful attempt to close above $1,225 with good volumes could take prices further higher towards important resistance levels near $1,245/55. A decline below $1,170 could revive bearish expectations again. Such a move could take prices lower again towards $1,141 or even lower to $1,100.

Though short-term charts are still looking neutral to bullish, the big picture still does not hold any major promise. A favoured view is that now prices are expected to get support for a push higher towards near-term resistances. However, any unexpected fall below $1,170 should warn of a decline.

The wave counts need to be altered as prices move, but the overall trend looks weak. It is most likely that the fall from the all-time highs at $1,925 to the recent low of $1,130 was a corrective wave “A”, while a wave “B” is in progress with targets near $1,435 or even higher.

It is also possible that the entire corrective A-B-C got over and a new impulse is in progress targeting $1,527-30 or even higher in the medium-term. If prices do cross over above $1,435, we can settle for the latter. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have gone above the zero line of the indicator, indicating a possible bullish reversal in trend. Only a cross over again below the zero line could hint at a bearish reversal.

Therefore, buy Comex gold on dips to $1,190-95 stop loss $1,170 targeting $1,225 initially followed by $1,245.

Supports are at $1,185, $1,170 & $1,145 and resistances are at $1,225, 1,245 & 1,275.

The writer is the Director of Commtrendz Research.

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