Stay short, as the bearish bias is still exerting itself. The COMEX Gold ended at USD1,297.30 last night, which was USD2 lower than its prior close of USD1,299.30. A “Doji” candlestick pattern was formed, which implied that neither bulls nor bears were able to take firm control at the end of the session. The correction is still in play, and the bearish bias is likely to extend more in later sessions. We note, however, that there is still room for a correction, given that the 14-day RSI indicator has yet to hit the 30-pt oversold level at 39.50 pts. Hence, our downside view is enhanced.

With no strong upside development in sight, this implies that the bearish bias is still exerting itself. Technically speaking, it is best that traders maintain short positions, with a stop-loss set above the USD1,331 threshold. This is in order to minimise the upside risk. Recall that we initially made the short recommendation on 16 May after a firm breach below the USD1,309 level.

We keep the immediate support at USD1,286, which is located at the low of 21 May. The following support is pegged at the USD1,263 threshold, or the low of 27 Nov 2017. On the flip side, the immediate resistance is maintained at USD1,309, which was the low of 8 Feb. If this level is taken out, our next resistance is found at USD1,331 – this was obtained from 4 Jan’s high.

Source: RHB Securities Research - 5 Jun 2018