Comex gold futures were sharply lower on Thursday on better economic data from the US. There have been other recent indicators of economic strength, including employers stepping up hiring in March, increased factory output and better sales at retailers. All these are contributing to weaker gold prices.
Lack of physical and investment demand remains weak with the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, seeing sharp outflows in recent days.
Comex gold futures fell lower as expected. Gold futures have been quite volatile with the overall bias still weak.
As mentioned in the previous update, though it looked like a possible bottom near $1,181 recently, price action has so far has not been very conclusive.
As expected prices got capped in the $1,310-15 range and edged lower. Initial target is at $1,245, followed by $1,220 levels immediately.
Resistances will be seen strongly around $1,277-80 levels and while $1,310-15 remains undisturbed, further downside is also possible towards $1,200 levels now.
Only a move above $1,332 could cause doubts over our bearish view.
The wave counts have been modified once again. This happens most of the times with Elliot wave analysis, and tends to be confusing to lay investors following this concept.
However, despite this short-coming, this is one of the best forecasting techniques in existence. We will now go with the alternative wave counts that we have considered broadly in our earlier updates.
From the peak of $1,920 a corrective decline in the form of “A-B-C” is already over at $1,181 and a new impulse has begun. Confirmation of such an impulse will be seen above $1,445. Fall below $1,250 could force us to abandon this scenario and look at a bearish one targeting $1,095.
We will now wait for a confirmation for a fall below $1,250.
RSI is in the neutral zone now indicating that it is neither oversold nor overbought. The averages in MACD are below the zero line of the indicator hinting at a bearish reversal.
Only a cross over above the zero line could hint at a bullish reversal again.
Therefore, immediately, one can look to sell gold in the $1,280-85 range with a stop loss at $1,311, targeting $1,245 followed by $1,225.
Supports are at $1,245, 1,225 and 1,185. Resistances are at $1,280, 1,310 and 1,333.
The author is the Director of Commtrendz Research. There is risk of loss in trading.