Maintain short positions, as market sentiment still favours the sellers. The COMEX Gold ended at USD1,302.70 last Friday, or USD0.30 lower from its prior close of USD1,303. We are not seeing any strong upside movements, which imply that market sentiment still leans more towards the sellers. We highlight that the 14-day RSI indicator is fluctuating below the 50-pt neutral level at 44.55 pts, which suggests the bears are in control over the bulls. In addition, the fact that the commodity is trading below the 50-day SMA line points towards a bearish outlook. These negative indicators enhance our downside view.

The current technical landscape suggests the ongoing correction is still in play. Thus, it is best that traders maintain short positions. In order to minimise the upside risk, we advise setting a stop-loss above the USD1,331 threshold. We initially made the short recommendation on 16 May, after the strong downside movement below the USD1,309 mark.

To the downside, we set 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. Conversely, our immediate resistance is at USD1,309, which was the low of 8 Feb. Should the COMEX Gold breach above this level, the next resistance is seen at the USD1,331 mark, ie 4 Jan’s high.

Source: RHB Securities Research - 11 Jun 2018