The current technical landscape suggests the retracement remains intact, stay short. At the end of yesterday’s session, the COMEX Gold registered a USD3.80 loss and closed at USD1,299.40. It left a black candle after it oscillated between a low of USD1,296.30 and high of USD1,304.80. This showed the session was led by the sellers. We believe the bearish bias is still in play. Judging from the current technical landscape, it is likely that the retracement may continue to extend once the breather above the USD1,286 level reaches its limit. In addition, the fact that the 14-day RSI indicator is situated below the 50-pt neutral level at 41.86 pts indicates weak market sentiment. This supports our downside view.

Based on the daily chart, we believe the bears are dominating market sentiment. As such, traders are advised to stay in short positions. For risk-minimisation purposes, we recommend setting a stop-loss above the USD1,331 threshold. This is in line with our initial short call on 16 May after a strong downside development below the USD1,309 mark.

To the downside, the USD1,286 mark, ie 21 May’s low, is still our immediate support. The following support is found at USD1,263, which was obtained from the low of 27 Nov 2017. Conversely, we maintain the immediate resistance at USD1,309 – this is located at the low of 8 Feb. The next resistance is pegged at USD1,331, or the high of 4 Jan.

Source: RHB Securities Research - 13 Jun 2018