Comex gold futures edged higher on Thursday, after marking a near-three-week high in the previous session, as the dollar eased on the back of uncertainty over the tax-cut Bill.

Comex gold futures have been moving in line with our expectations so far, but the road ahead still does not look friendly.

As mentioned in the previous update, prices are expected to consolidate and inch higher towards $1,300-05 an ounce now. However, failure to follow through higher from there could once again dent the confidence of the bull camp.

The price action so far indicates a possible intermediate bottom at $1,260. But any unexpected fall below $1,267 could easily drag prices to $1,245-50. This should be considered a good level to give up longs. Strong initial resistances are around $1,287-92.

A close above $1,300 could suddenly open the upside again to $1,330-35. Unexpected declines below $1,260, on the other hand, could revive bearish expectations and longs to be abandoned strictly.

Such a fall could see prices heading towards our potential bearish near-term targets around $1,240-45. The $1,240-45 is a very strong medium-term support and, therefore, we can expect a strong bounce or a retracement from those levels in the coming weeks.

The picture is quite mixed presently and the favoured view is for prices to edge higher towards resistances in the very short-term, but they may find the going tougher above $1,300 and failure to follow-through higher could lead to a sell-off again.

Wave counts: It is most likely that the fall from record $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 levels or a complete correction of A-B-C ending with this decline.

Subsequently, 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 a 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.

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 neutral zone now indicating that it is neither overbought nor oversold. 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 reversal in trend to bullish.

Therefore, buy Comex gold on dips to $1,277 with a stop-loss at $1,267 targeting $1,297-1,300. Supports are at $1,270, 1,255 and 1,245. Resistances are at $1,292, 1,305 and 1,335.

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

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