Commodity Calls

Buy Comex gold if it dips to $1,267-70/ounce

Gnanasekaar T | Updated on January 08, 2018

Comex gold futures inched higher, as the slide from last month’s peak had mostly run its course with markets waiting for more clues on whether interest rates would be hiked in the United States. Several Fed officials are due to speak later on Thursday as markets await US non-farm payroll data on Friday.

Global stocks at peak levels could prompt investors to move into the safety of bullion too.

Comex gold futures are moving in line with our expectations. Prices came close to our targets near $1,267 an ounce.

As mentioned in the previous update, a close below $1,287 could open the downside to $1,273 followed by the $1,260 in the near-term.

It needs to be seen if there is any possibility of a strong rebound from those levels. So far, the price action has not indicated any possibility of an intermediate bottom yet.

But, while the $1,267 an ounce holds, there is a good chance of the retracement continuing towards $1,287-95. The momentum is still strong on the downside and any upticks could be short-lived.

Prices could head towards our potential bearish near-term targets around $1,240-45, while upside attempts get capped around $1,287-90 resistance levels initially followed by $1,310-15 in the near-term. The $1,240-45 level is a strong medium-term support and therefore, we can expect a rebound or a retracement from those levels in the coming weeks.

Only a direct rise and close above $1,297 could hint at further bullishness ahead.

The favoured view expects prices to edge higher towards resistances mentioned above and failure to follow through higher could lead to sell-off again.

On the other hand, a close above $1,297 could see bearish bets being unwound.

Wave counts

It is most likely that the fall from the record highs at $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 shown 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 below the zero line of the indicator again, indicating a bearish reversal.

Only a crossover again above the zero line could hint at a reversal in trend to bullishness.

Therefore, buy Comex gold on dips to $1,267-70 with a stop-loss placed at $1,259 and targets at $1,295 followed by $1,315. Supports are at $1267, 1,255 and 1,240. Resistances are at $1,295, 1,315 and 1,327.

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

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Published on October 05, 2017
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