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Comex gold futures ended lower on Thursday as the European Central Bank left interest rates unchanged and said its president would announce further monetary policy measures later in the day. The stimulus measures should increase demand for bullion, but gold could have possibly priced in the ECB factor already.
Comex gold futures moved perfectly in line with our expectations. As mentioned in the previous update, chart picture indicates further bullishness ahead for Comex gold and we expected prices to test resistances above $1,255 per ounce. It has even crossed the psychological resistance at $1,300. However, it could not sustain above it.
We expect prices to consolidate in the $1,265-95 range and then push higher again towards the important resistance near $1,325 levels. Failure to hold support at $1,265 levels could drag prices lower to next important support at $1,220-25 levels again.
However, the present price structures do not indicate any major downside. Strong resistance will now be seen at $1,295-1,300 followed by $1,325 levels. The wave counts have to be revisited once again. As illustrated in the previous update, if prices close above $1,255 we can safely assume that the declining impulse has ended and a new corrective one has begun.
It is most likely that the fall from the all-time highs at $1,925 to the recent low of $1,130 was either a corrective wave “A” and a wave “B” is in progress with targets near $1,435 or even higher. It is also possible that the entire corrective A-B-C got over and a new impulse is in progress targeting $1,527-30 or even higher in the medium-term. If prices do cross -over above $1,435, then we can settle for latter.
RSI is in the overbought now indicating that a possible downward correction is in the offing. The averages in MACD have gone above the zero line of the indicator, indicating a possible bullish reversal now. A cross over again below the zero line could hint at bearishness.
Therefore, look to buy Comex gold on dips to $1,265 with a stop-loss of $1,244 targeting $1,295 initially followed by $1,320.
Supports are at $1,265, 1,245 and 1,220. Resistances are at $1,295, 1,325 and 1,350.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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