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Comex gold futures were lower on Thursday, retreating further from the previous session’s seven-week high as the dollar firmed against major currencies which resulted in some profit-taking in precious metals.
A sooner-than-expected rise in interest rates could boost the dollar and hurt zero-yield gold. Weakness in energy prices has also weighed on gold sentiment lately, dulling the metal’s appeal as a hedge against oil-led inflation.
Comex gold futures moved perfectly according to our expectations. As mentioned in the previous update, a bounce from $1,142 to $1,220/oz has been impressive, squeezing out shorts in the process.
Ideally, from present levels prices are expected to grind higher gradually towards $1,255-60 levels. Supports are now seen at $1,210 followed by $1,185 levels.
It looks like an intermediate bottom has been put in place, and while supports hold, we expect prices to edge higher towards near-term resistances at $1,255.
A move above $1,239 could be the trigger to initial resistance at $1,255 followed by stronger resistance at $1,275-80 levels. Expect a push while supports in the above mentioned zone holds.
Only an unexpected fall below $1,185 could revive bearish hopes.
The wave counts have to be revisited again. Fall below $1,250 has forced us to abandon any bullish hopes and look at a bearish one targeting $1,050.
We feel the present set of moves from $1,175 to $1,435 is a corrective wave four in an impulse which began from the high of $1,920, with an equality target at $1,020. The $1,035-70 could prove to be a good intermediate support.
Ideally, from this area, a pullback higher towards $1,300 looks likely. If prices close above $1,220 we can safely assume that the declining impulse has ended and a new corrective one has begun.
RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD have crossed over above the zero line of the indicator indicating a possible bullish reversal.
A cross over again below the zero line could hint at a bearish reversal again.
Therefore, look to buy Comex gold initially on dips to $1,210-12 with a stop-loss at $1,184 targeting $1,255 followed by $1,275.
Supports are at $1,215, 1,185 and 1,145. Resistances are at $1,240, 1,255 and 1,275.
The writer is the Director of Commtrendz Research and there is risk of loss in trading.
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