Maintain short positions; no strong buying activities in sight yet. The COMEX Gold rebounded by USD2.40 to USD1,306.50 and left a white candle at the end of yesterday’s session. As a result, it reached near the USD1,309 resistance. Nevertheless, we make no change to our bearish view given the absence of strong upside development. We also highlight that the 14-day RSI indicator is currently situated below the 50-pt neutral level at 45.17 pts, which implies that market sentiment is weak. The fact that the commodity is trading below the 50-day SMA line points to a weak outlook. All these negative indicators support our downside view.

As long as we do not see strong upside development above the USD1,331 resistance, this implies that the 2- week bearish bias is still exerting itself. Thus, it is best that traders maintain short positions. In order to minimise upside risk, we advise setting a stop-loss above the aforementioned USD1,331. This follows our short recommendation below the USD1,309 threshold on 16 May.

The immediate support stays at USD1,286, or 21 May’s low. The following support is at the USD1,263 threshold, which was 27 Nov 2017’s low. To the upside, we set the immediate resistance at USD1,309, located at the low of 8 Feb. If this level is taken out, our next resistance is seen at USD1,331, ie the high of 4 Jan.

Source: RHB Securities Research - 31 May 2018