Comex gold futures nudged lower on Thursday giving up some of its gains made in the previous week, as the dollar gained on positive economic data from China and the US, but it held above a key level as safe haven demand due to North Korean tensions capped losses.

Comex gold futures are moving perfectly in line with our expectations so far. As mentioned in the previous update, the critical $1,300-05 resistance needs to be taken out convincingly to expect further bullishness ahead. This area seems to be holding attempts to decline so far. As explained previously, in the medium-term possibility exists for this move to extend to $1,335-37, an important resistance level.

Near-term support is in the $1,295-97 zone, and we expect this zone to hold supports and push higher again towards $1,335 or even higher to $1,374 in the coming sessions. Break below $1,285 could temporarily dent the prospects of further upside. Such a move could see prices testing $1,257-60 followed by stronger supports at $1,252-53. Favoured view expects prices to edge higher again after testing key support levels mentioned above. It appears more likely that supports at $1,295-97 to hold for a push higher towards $1,335 or even higher in the coming sessions.

Going forward

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 $975, 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 are 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 bullish.

Therefore, Buy Comex gold on dips to $1,295-97 with stop-loss at $1,283 targeting $1,335 followed by $1,350.

Supports are at $1,278, $1,1265 and $ 1,253 and Resistances at $1,305, 1,335 & 1,351.

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

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