Comex gold futures fell lower on Thursday, on growing expectations that US interest rates will rise before the end of the year lifted the dollar and took the shine off gold, one of the year’s best- performing assets.

Comex gold futures moved against our expectations. As mentioned earlier, a direct fall below $1,305 an ounce could postpone the bullishness, and such a fall could see prices testing $1,288-90 levels or even lower, and failure to hold support at $1,288-90 could dent the prospects of the uptrend. Since price has broken the key support around $1,295-1,305 range, this will tend to cap any upside attempts in the coming sessions.

The big picture is, however, looking still firm, which gives a feeling that $1,245-50 levels could hold attempts to decline and a bounce from there looks likely.

In the event that this support also gives way, stronger support lies around $1,208-10 levels subsequently. Though short-term weakness is seen, we are still hopeful of a recovery once these support levels are tested in the coming weeks.

Favoured view now expects prices to find resistance around the $1,295-1,305 levels zone and then edge lower towards important supports around $1,245 followed by $1,210 levels. Only an unexpected rise above $1,320 on a closing basis could revive bullish hopes and such a rise will hint that the downward correction has ended.

Wave counts: It is most likely that the fall from the 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. Subsequent 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 levels. 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. As prices have broken certain important resistances and shows impulsive tendencies, we will now stick with the above count.

And as mentioned earlier, once prices reach $1,025-45 levels we will look for any signs of reversal. There are signs of a turnaround, and prices convincingly risen in volumes and closed above $1,300 levels, which further reaffirms our wave count.

RSI is in the oversold zone now indicating that an upward correction is in the offing. 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, sell Comex gold on rallies to $1,290-95 with stop-loss at $1,321 targeting $1,245 followed by $1,210.

Supports are at $1,255, 1,210 and 1,170. Resistances are at $1,295, 1,320 and 1,345.

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

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