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Comex gold futures rose for a second day on Thursday, hitting a six-week high as the dollar dropped to a 13-month low after the US Federal Reserve indicated it would keep to a slow path of monetary tightening.
Comex gold futures are moving perfectly in line with our expectations so far. As mentioned in the previous update, we expect a consolidation at these levels in the $1,231-41 range before edging higher again towards $1,260, where stronger resistance is noted.
Prices have crossed that level and are edging towards $1,277-78, a potential target area. Chances exist even for an extension even to $1,295 . Though not expected, a direct fall below $1,240 could cast doubts on our bullish view.
Such a move could see prices drop lower, towards $1,195, or even lower to $1,177, in the coming sessions. Dips to $1,257 followed by $1,248 are seen supportive in the coming sessions.
Favoured viewThe favoured view expects prices to edge higher towards the resistances mentioned above. The trigger for such a rise could be on a close above $1,265, which could hint at a revival in upward momentum. It looks more likely that the supports at $1,255-60 will hold for a push towards $1,278-80 or even higher.
Wave counts: It is most likely that the fall from the all-time 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 or a complete correction of A-B-C ending with this decline.
Subsequent 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 . 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. But, a failure to follow through above $1,355 has dashed any hopes of any impulsive up move.
As prices have broken certain important supports and shown weakness targeting $975, we are tilted towards looking at this as a corrective wave C in progress.
Buy Comex gold on dips to $1,255-57 with a stop loss at $1,243 targeting $1,277 followed by $1,295. Supports are at $1,255, $1,245 and $1,227 and resistances are at $1,278, 1,295 and 1,305.
The writer is the Director of Commtrendz Research. There is risk of loss in trading .
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