Comex gold futures prices fell on Thursday after the Federal Reserve left interest rates unchanged but hinted at hikes later this year, and as investors awaited the US nonfarm payroll data for cues on the health of the world's largest economy.

Comex gold futures are moving perfectly in line with our expectations. As mentioned in the previous update, prices could now consolidate in the $1,290-$1,320 before edging higher towards $1,352-55 zone. As expected, prices have come to the important resistance around $1,355 and moved even beyond that. Dips to $1,330 followed by $1,320 are expected to hold for an initial test of $1,374 in the coming sessions. A crucial long-term trend line breakout at $1,343-45 has revived bullish hopes for $1,430-35 in the coming months. Only a direct fall below $1,307 could postpone the expected bullishness. Such a fall could see prices testing the next support at $1,275-80 again. 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. In the coming week we expect $1,325-30 to hold for a push higher towards $1,373-75 or even higher to $1,390-95.

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. 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 shows weakness targeting $1,100 . But, a sustained move above $1,200 has once again revived bullish hopes and will make the necessary adjustments to the wave counts, as the prices break key resistance above. RSI is in the oversold zone now indicating a possible correction in the offing. The averages in MACD 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 $1,330-35 with stop loss at $1,321 targeting $1,374 followed by $1,391.

Supports are at $1,335, $1,320 & $ 1,305 and Resistances are at $1,355, 1,374 & 1,397.

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

Related Topics