Comex gold futures gained amid a weaker dollar and a firmer euro on Thursday, with the market expecting the European Central Bank to taper monetary stimulus at a meeting later in the day.

Comex gold futures are moving against our expectations so far. As mentioned in the previous update, it needs to be seen if there is a possibility of a strong rebound from the lows of $1,260 per ounce. Price action still indicates a possible intermediate bottom at $1,260 .

But, any unexpected fall below $1,260 could easily drag prices to $1,245-50. Prices are expected to consolidate and inch higher towards $1,310-15 levels now.

Failure to follow-through higher from there could once again dent the confidence of the bull camp. Strong initial resistances are around $1,297-1,300 . A close above here could open the upside again to $1,330-35 .

An unexpected decline below $1,260 could revive bearish expectations. Such a fall could see prices heading towards our potential bearish near-term targets around $1,240-45 again. The $1,240-45 region is a strong medium-term support and therefore, we can expect a strong bounce in the coming weeks.

The favoured view expects prices to edge higher, towards resistances in the short-term, but it could find the going tougher above $1,300 and failure to follow-through higher could lead to a sell-off again.

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 the possibility of extending towards $1,025-30 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.

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 upward move. As such, prices have broken certain important supports and shown weakness targeting $1,100. But, a sustained move above $1,200 has once again revived bullish hopes.

RSI is in the neutral zone, now indicating that it is neither overbought nor oversold.

The averages in MACD are below the zero line of the indicator again, indicating a bearish reversal. Only a cross-over again above the zero line could hint at a reversal in trend to bullishness.

Therefore, buy Comex gold on dips to $1,270-75 with the stop-loss at $1,260 targeting $1,300.

Supports are at $1,270, 1,260 and 1,245. Resistances are at $1,295, 1,315 and 1,335.

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

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