Comex gold futures ended higher on Thursday as stock markets fell and weak US data added to uncertainty over the timing of a rate rise by the Federal Reserve. Delay in an expected hike in US rates could boost demand for bullion, a zero yielding instrument. The psychological $1,200 an ounce level has been acting as a support and resistance as well, as gold prices continue to hover and consolidate around this level.

Comex gold futures moved lower as expected. However, a pullback from the recent lows near $1,180 and a subsequent crossover above $1,200 has caused doubts on our bearish view. Mild bullish indication in prices, hints at a possible move towards near-term resistance around $1,225 levels. Only a successful attempt to close above $1,225 with good volumes can take prices further higher towards important resistance levels near $1,245. A very strong support is seen near $1,175-80 levels. 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. Only a close above $1,225 could take prices higher once again towards $1,245-55 levels or even higher. Though the short-term charts are still looking neutral to bullish, the big picture still does not hold any major promise for a rally higher. Favoured view now expects prices to get supported for a push towards near-term resistances.

The wave counts need to be altered as prices move, but the overall trend looks weak and at present levels makes it difficult to take any directional call decisively. So, for now, we will stick to our previous assessment. It is most likely that the fall from the all-time highs at $1,925 to the recent low of $1,130 was either a corrective wave “A” and 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 $1527-30 or even higher in the medium-term. If prices do cross -over above $1,435, then 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 are 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 $1,197-98 with a stop loss of $1,179 targeting $1,225 initially followed by $1,245.

Supports are at $1,195, 1,175 and 1,145. Resistances are at $1,225, 1,245 and 1,275.

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

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