Comex gold futures, lower on Thursday in response to an easing of trade tensions after the United States agreed to refrain from imposing tariffs on cars from the European Union.
Comex gold futures are moving in line with our expectations. As mentioned in the previous update, prices have recovered after coming close to important supports. 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 making higher highs so far in 2017, 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 $1,335 . In the short-term, we expect prices to range in the $1,1965-1,275 range or even extend to $1,289-90 where good resistances can be seen again. Only a close above $1,305 could revive bullish hopes once again for $1,335 or even higher. In the coming sessions crucial support will come into play around $1,210-15 and we expect prices to stabilize and reverse higher from there towards $1,248 or even higher. Unexpected fall below $1,210 could dent this mildly bullish view.
We will take a look at the wave counts now and understand the possible scenarios that can unfold going forward. 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. Subsequently, 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. An eventual break above $1,355 could see the Wave "B" scenario emerge in the coming sessions. While $1,270 holds, we still favour prices rising higher towards $1,450-75 in the form of wave "B". We will reasses around $1,450-70on the potential for a wave "C" decline subsequently. RSI is in the oversold zone hinting at a upward correction in the offing before more declines can be seen. 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 bearish reversal in trend.
Therefore, Buy Comex gold around $1,210-15 with stop loss at $1,203 targeting $1,235 followed by $1,248.
Supports are at $1,215, $1,195 & $ 1,178 and Resistances are at $1,235, 1,248 & 1,270.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.