Comex gold futures ended higher on Thursday, as the dollar retreated slightly and European equities dropped alongside fading optimism over a potential deal between Greece and its creditors. Investors were monitoring updates from a meeting of G7 ministers and central bank heads in Germany. Gold is usually seen as a hedge against political and financial risk, though the impact on such worries lately has been short-lived. Comex gold futures moved against expectations yet again. Prices have been quite volatile, which happens before an explosive move to follow. The direction the explosive move could take is becoming a challenge to identify for now. However, looking at Dollar against Yen, chances are more for a break below the support levels. Strong resistances are at $1,195-1,210 per ounce levels now.

As mentioned in the previous update, prices failed to close above $1,225 and the subsequent fall to $1,202 has dented the bullish sentiment. Very strong support is seen near $1,170-80 levels. Only a decline below $1,170 could revive bearish expectations again. Such a move could take prices lower again towards $1,141 or even lower to $1,100. As cautioned earlier, though the short-term charts are still looking neutral to bullish, the big picture still does not hold any major promise for a rally higher. Favoured view now expects rallies to $1,195-1,200 to get capped for a sharp decline. However, a convincing break above $1,215 could once again make us to rethink our bearish view.

The wave counts need to be altered as prices move, but the overall trend looks weak and at present levels makes it difficult to take any directional call decisively. So, for now, we will stick to our previous assessment. 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 $1527-30 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 have gone below the zero line of the indicator, indicating a bearish reversal in trend again. Only a cross over again above the zero line could hint at a bullish reversal.

Therefore, sell Comex gold on rallies to $1,190-95 with a stop-loss of $1,209 targeting $1,170 or even lower to $1,145.

Supports are at $1,170, 1,145 and 1,125. Resistances are at $1,195, 1,215 and 1,245.

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

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