Comex gold futures dropped to its lowest in over two months on Thursday, as equities rose, while investors waited to see if US jobs data could put the Federal Reserve on track to hike interest rates. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, posted the first monthly dip in August in four months. They fell 1.27 per cent to 943.23 tonnes on Wednesday and were down 1.6 per cent for the month.

Comex gold futures moved against our expectations. As mentioned earlier, prices are expected to move with a negative bias, but the picture for gold has presently turned trendless.

A potential target lies around $1,450-55 per ounce levels, being an equality target in the coming months. Initial resistance is seen at $1,355 levels now. Once above here, prices could push higher further towards $1,400 levels or even higher in the coming sessions. We are close to the important support around $1,305.

Only an unexpected fall below $1,305 could postpone the bullishness and such a fall could see prices testing $1,290-95 levels being a strong trend line support level. Below here, it could further become bearish for $1,255, which is not our favoured view. Failure to hold support at $1,290-95 could clearly dent the prospects of the uptrend.

Favoured view still expects prices to be find support around the $1,295-1,305 levels and then edge higher again.

Wave counts: It is most likely that the fall from the record highs at $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 neutral zone now indicating a that it is neither overbought nor oversold.

The averages in MACD have gone 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 bullish reversal in trend.

Therefore, buy Comex gold on dips to $1,300-05 with a stop-loss at $1,290 targeting $1,340 followed by $1,375.

Supports are at $1,305, 1,290 and 1,255. Resistances are at $1,340, 1,355 and 1,400.

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

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