Short call is still intact, given that the ongoing bearish bias is still exerting itself. The COMEX gold registered a USD1.60 gain at yesterday’s close to USD1,303. Nevertheless, this does not negate our bearish view, given that no strong upside movement has occurred at present. Judging from the current technical landscape, we believe the commodity is merely taking a breather above the USD1,286 level. This is viewed as a normal reaction following a firm breach below the USD1,309 mark on 15 May. Overall, the ongoing bearish bias is still exerting itself. This is supported by the weak market sentiment, as the 14-day RSI indicator is situated below the 50-pt neutral level at 44.78 pts.

As no strong upside development is in sight, we believe the opportunities are still leaning more towards the sellers. Hence, traders are advised to stay in short positions, with a stop-loss pegged above the USD1,331 threshold. This is in order to minimise the upside risk. Recall that we made the short recommendation on 16 May, after the COMEX Gold’s price plunged below the USD1,309 threshold.

Our immediate support is seen at USD1,286, which was the low of 21 May. This is followed by the USD1,263 support, or the low of 27 Nov 2017. On the flip side, the immediate resistance is maintained at USD1,309, ie the low of 8 Feb. If this level is taken out, our next resistance is pegged at the USD1,331 threshold, which was derived from 4 Jan’s high.

Source: RHB Securities Research - 8 Jun 2018