TECHNICAL ANALYSIS. Sell gold at $1,210-15/ounce

Comex gold futures fell on Thursday as a rally in US equities offset support from uncertainty over the new US administration’s policies and a weaker dollar.

Comex gold futures moved as per expectations. As we have been maintaining, scope for further rise to $1,215-20 an ounce looks likely, but we still expect prices to edge lower again.

Prices have found strong resistance in the $1,215-20 zone and declined from there once again last week. Near-term supports are at $1,185 followed by $1,170 levels.

As cautioned earlier, though the upside correction from the lows of $1,127 has extended beyond $1,200 unexpectedly and continues to show strength in the near-term, we still view the current up move as a corrective one within a larger downtrend.

Only a daily close above $1,225, could again revive bullish hopes and such a rise will hint that the downward correction has ended.

Favoured view expects resistance in the $1,210-15 zone to cap upside attempts and edge lower to supports mentioned above. We still maintain our broader bullish view of gold in the long-term.

And the current fall to recent lows could once again be an opportunity to do some bottom picking in 2017.

Favoured view expects prices to initially edge higher and then decline lower again, but one should be ready to abandon the bearish view if prices close above $1,225 levels.

Wave counts: It is most likely that the fall from the record $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, 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. But, failure to follow-through above $1,355 has dashed any hopes of any impulsive up move.

As prices have broken certain important supports and shows weakness targeting $975 levels, we are tilted towards looking at this as a corrective wave “C” in progress.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have gone 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 bullish.

Therefore, sell Comex gold around $1,210-15 with stop-loss at $1,223 targeting $1,170 followed by $1,145.

Supports are at $1,185, 1,170 and 1,145. Resistances are at $1,220, 1,245 and 1,260.

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

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