Comex gold futures steadied above an earlier two-week low on Thursday as the dollar softened ahead of US consumer inflation data, which will be closely watched for the likely pace of interest rate increases by the Federal Reserve.

Comex gold futures are moving in line with our expectations so far. As mentioned in the previous update, favoured view expects prices to edge higher again after testing key support levels. As explained previously, in the medium-term possibility exists for this move to extend to $1,374, an important medium-term resistance level. Prices have corrected from $1,357and near-term weakness is seen, where it could be seen testing important supports around $1,310-15and failure to hold here could take it even lower to $1,295-1,300 in the coming sessions.

However, we expect a good rebound from there eventually heading higher again. Prices could head towards our potential near-term targets around $1,375. A direct rise above $1,374 could hint at further bullishness towards $1,395-1,400. Favoured view expects prices to drift lower towards $1,305-10. It appears more likely that supports at $1,300-05 to hold for a push higher towards $1,355 or even higher towards $1,374 in the coming sessions. Unexpected fall below $1,287-90 could dent our bullish expectations.

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 still 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 $1,305 with stop loss at $1,287 targeting $1,355 followed by $1,374.

Supports are at $1305, $1,295 & $ 1,265 and Resistances are at $1,335, 1,355 & 1,374.

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

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