Maintain short, as the commodity is still in a correction stage. After three weak performances in a row, the COMEX Gold rebounded by USD4.90 to USD1,302.20 last night. It charted a white candle after having oscillated between a low of USD1,293.50 and high of USD1,304.80 – this indicated that the session was led by the bulls. However, this does not negate our bearish view, as no strong upside movements have been sighted yet. We also highlight that the 14-day RSI indicator is currently situated below the 50-pt neutral level at 43.84 pts. This implies that market sentiment is weak, thereby enhancing our downside view.

The daily chart suggests the commodity is still in a correction phase. As such, we maintain our short recommendation. For risk-control purposes, traders are advised to set a stop-loss above the USD1,331 threshold. Our short call was initially triggered on 16 May, following a strong downside development below the USD1,309 mark.

Presently, the immediate support stays at USD1,286, or the low of 21 May. If this level is taken out, the next support is seen at USD1,263, which was obtained from the low of 27 Nov 2017. Conversely, we keep the immediate resistance at USD1,309 – this is located at the low of 8 Feb. For the next resistance, look to USD1,331, or 4 Jan’s high.

Source: RHB Securities Research - 6 Jun 2018