Comex gold futures edged up on Thursday as the US dollar weakened, although the prospect of a US rate increase in June kept prices just above eight-week lows hit earlier this week.

Comex gold futures moved in line with our expectations. As mentioned earlier, prices are moving with a mild bearish bias presently. A fall below the near-term support at $1,236 has dented the bullish picture and would act as a strong resistance going forward. A very important rising trend line support at $1,236 was broken earlier.

In the bigger picture prices have hit an important support around $1,210-15 and a possible intermediate bottom is being formed, as it has bounced higher.

Any upticks to $1,236 followed by $1,241-43 are expected to cap upside attempts. The favoured view expects prices to push higher initially towards resistances mentioned above and then to edge lower again towards $1,205-10. Only an unexpected rise above $1,245 could hint at a resumption of the uptrend. Such a move could take prices higher towards $1,255, followed by $1,271.

It is most likely that the fall from the all-time high of $1,925 to the recent low of $1,088 so far was either a possible corrective wave A, with the possibility of extending towards $1,025-30 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 . 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 show 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 have gone 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 bullishness.

Therefore, buy Comex gold around $1,220 with a stop loss at $1,209, targeting $1,245.

Supports are at $1,210, $1,195 and $1,165 and Resistances are at $1,245, 1,257 and 1,271.

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