Comex gold futures were lower on Thursday, after the Federal Reserve painted a bullish picture of the US economy, signalling it was on course to lift interest rates this year. The prospect of a hike in US rates makes zero-yield gold less attractive. However, a drop in US business investment spending in December suggested a risk that fourth-quarter economic growth could fall short of forecasts, which could continue to support gold as a haven. Comex gold futures moved in line with our expectations. Prices could not sustain above the psychological resistance of $1,300 an ounce. Expect prices to consolidate in the $1,265-95 range and then push towards the important resistance near $1,325 levels. This is our favoured view. However, failure to hold support at $1,265 levels could drag prices lower to next important support at $1,235-37 levels again. But the current price structures do not indicate any major downside. Strong resistance will now be seen at $1,295-1,300, followed by $1,325 levels. Price structures are still displaying neutral to bullish tendencies. While prices stay above $1,235 levels, chances exist for a retest of recent highs or even higher. Only a decline below $1,230 could cause doubts on the bullish view.

The wave counts have to be revisited once again. As illustrated in the previous update, if prices close above $1,255 we can assume that the declining impulse has ended and a new corrective one has begun. 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 $1,527-30 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 gone above the zero line of the indicator, indicating a possible bullish reversal now. A cross over again below the zero line could hint at bearishness.

Therefore, look to buy Comex gold on dips to $1,255 with a stop-loss of $1,232 targeting $1,295 initially followed by $1,320.

Supports are at $1,265, 1,235 and 1,220 and Resistances are at $1,295, 1,325 and 1,350.

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

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