Commodity Calls

Buy gold if it dips to $1,315/ounce

Gnanasekaar T | Updated on January 18, 2018 Published on January 18, 2018

Comex gold futures slipped on Thursday, hitting its lowest in nearly a week, as the dollar edged higher from three-year lows on stronger-than-expected US economic data.

Comex gold futures are in line with our expectations. As mentioned in the previous update, prices could now consolidate in the $1,290-1,320 per ounce levels before edging higher towards $1,352-55 zone. Strong resistance was seen around $1345 levels, which has repulsed attempts to follow-through higher. Prices have been on the rise for the last 25 trading sessions and correction was in the offing any time soon. Further dips to $1,315 looks likely now. But such a dip could most likely hold and prices could once again try to aim for the next important resistance at $1,253-55 levels.

Dips to $1,315 followed by $1,305 is expected to hold for an initial test of $1,345 followed by $1,352-55 levels. A direct fall below $1,302 could postpone the expected bullishness. Such a fall could see prices testing the next support at $1,280. In the coming week, we expect $1,315-20 levels to hold for a push higher towards $1,345 or even higher to $1,350-55 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 $1025-30 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. 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 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 bearish.

Therefore, buy Comex gold on dips around $1,315-20 with the stop-loss at $1,293 targeting $1,345 followed by $1,355. Supports are at $1315, 1,305 and 1,289. Resistances are at $1,345, 1,353 and 1,374.

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

Published on January 18, 2018
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