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Comex gold futures inched higher on Thursday as the dollar softened amid easing Sino-US trade tensions, but investors remained cautious ahead of next week’s US Federal Reserve policy meeting.
Comex gold futures have been moving in line with our expectations. As mentioned earlier, we expected prices to stabilise and reverse higher towards $1,235. As we have been maintaining for a while, the medium-term picture still holds some promise, therefore caution should be exercised on getting excessively bearish too.
From the bottom at $1,045 in December 2015, prices have been touching new highs, a clear sign of a rising trend, which has made us believe the bigger picture to be supportive despite strong corrective declines from time to time. A positive trigger for the medium-term in sustaining the uptrend is likely to be above a close of $1,275.
In the short-term, we expect prices to be in the $1,145-1,275 range or even extend to $1,120-25 where good supports can be seen again. Only a close above $1,275 in the bigger picture could revive bullish hopes once again for $1,335 or even higher.
Prices have been moving a narrow range, a typical phenomenon before a breakout either way, and in this case most likely on the upside. In the coming sessions, crucial support will come into play around $1,190-95 and we expect prices to stabilise and move higher from there towards $1,236, or even higher to $1,255.
Wave counts
It is most likely that the fall from the all-time 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 or a complete correction of A-B-C ending with this decline.
Subsequent to this decline, 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.
While $1,270 holds, we still favour prices rising higher towards $1,450-75 in the form of wave B. We will re asses around $1,450-70on the potential for a wave C decline subsequently.
RSI is in the neutral zone hinting that it is neither overbought nor oversold.
The averages in MACD are still below the zero line of the indicator again, indicating bearishness to be intact. Only a crossover again above the zero line could hint at a bearish reversal in trend.
Therefore, Buy Comex gold around $1,190-95 with a stop-loss at $1,180 targeting $1,225 followed by $1,236. Supports are at $1,190, $1,175 and $ 1,145. Resistances are at $1,225, 1,236 & 1,265.
The writer is the Director of Commtrendz Research.There is risk of loss in trading.
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