Comex gold futures were higher on Thursday supported by expectations that the Federal Reserve will hold off raising interest rates this year.

The world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, said its holdings rose 7.7 tonnes on Wednesday, its first inflow since October 1 and the biggest of any day since February 2.

Comex gold futures moved perfectly in line with our expectations. As mentioned in the earlier update, while supports hold, an eventual break above $1,155 per ounce looks likely targeting $1,168-70 levels or even higher. Close above near-term resistance at $1,155 and the important $1,170, 200-day moving average, has once again triggered lot of interest towards gold.

Strong resistance will be seen near the psychological $1,200 levels, with the possibility of even pushing higher towards $1,230-35 levels, being a strong falling trend line resistance zone. Either close to $1,200 or around $1,230-35, prices are once again expected to come off lower from there.

Supports are now seen at $1,165-68 levels in the coming sessions. An unexpected fall below $1,148 could force us to abandon our bullish view.

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 again, indicating bullishness to be intact. Only a cross over again below the zero line could hint at a bearish reversal.

Therefore, buy Comex gold near $1,165-68 with a stop-loss of $1,148 targeting $1,198 followed by $1,225.

Supports are at $1,165, 1,135 and 1,110 and Resistances are at $1,195, 1,230 and 1,245.

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

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