Sell gold on rallies to$1,272-75/ounce

Comex gold futures ruled sharply lower on Thursday, hitting 16-week low on a firm dollar and equities, while weak physical demand further weighed on prices.

The dollar hovered at a two-month high against a basket of major currencies, while global shares traded near an all-time peak on bets the European Central Bank would unveil new stimulus measures next week. Investors also abandoned the haven metal following decreasing tensions in Eastern Europe and solid US economic numbers.

Comex gold futures finally moved lower after spending the last few months in a choppy range.

As cautioned earlier, a decline below $1,270-72 levels could further accelerate the fall towards $1,245 or even lower to $1,225.

Prices fell against our preferred expectation of test of $1,330. An immediate target is around $1,225-30 levels. Subsequently, prices have the potential to even test $1,185-90 range. Resistances will be seen at $1,275 followed by $1,285 now.

Move above $1,292 could lessen the chances of the expected decline to above mentioned levels.

We will now go with the alternative wave counts that we have considered broadly in our earlier updates.

From the peak of $1,920 a corrective decline in the form of “A-B-C” is already over at $1,181 and a new impulse has begun. Confirmation of such an impulse will be seen above $1,445.

Fall below $1,250 could now force us to abandon this scenario and look at a bearish one targeting $1,095. We will now wait for a confirmation for a fall below $1,250.

RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD are below the zero line of the indicator hinting at a bearish reversal.

Only a cross over above the zero line could hint at a bullish reversal again. Therefore, look to sell gold on rallies to $1,272-75 zone with a stop loss at $1,292 targeting $1,225 followed by $1,185.

Supports are at $1,245, 1,230 and 1,200. Resistances are at $1,275, 1,295 and 1,310.

(The author is the Director of Commtrendz Research and also in the advisory panel of Commodity exchanges and corporate houses. The author is not liable for any loss or damage, including without limitations, any profit or loss which may arise directly or indirectly from the use of above information.)

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