Comex gold futures edged down on Thursday as a recovery in the dollar prompted some buyers to cash in recent gains, though uncertainty over the outlook for US monetary policy continued to underpin the metal.

Comex gold futures moved perfectly in line with our expectations. As mentioned earlier, some minor signs of exhaustion is noted, which could see a potential correction lower towards $1,335-40 an ounce levels, being a rising trend line support zone. Prices went even lower than that, but recovered smartly once again.

We expect a phase of consolidation before the uptrend resumes again. A potential target lies around $1,450-55 levels, being an equality target.

As expected, we saw prices testing supports in the $1,330 range again, and rising higher from there. Initial resistance is seen at $1,365-75 levels now. Once above here, prices could push higher further towards $1,400 levels or even higher in the coming sessions. Only an unexpected fall below $1,325 could postpone the bullishness.

Favoured view still expects prices to be find support around the $1,330 levels and then edge higher towards important resistances around $1,400 followed by $1,435-50 levels.

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 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 possible downside correction in the offing. The averages in MACD are above the zero line of the indicator again, indicating a bullish reversal. Only a cross over again below the zero line could hint at a reversal in trend to bearish.

Therefore, buy Comex gold on dips to $1,335-40 with stop-loss at $1,321 targeting $1,400 followed by 1,435.

Supports are at $1,335, 1,310 and 1,270 and Resistances are at $1,375, 1,398 and 1,435.

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

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