Maintain short positions, as the bears are still dominating market sentiment. The COMEX Gold ended at USD1,301.30 last night and posted a USD1.90 gain. This minor increase does not negate our bearish view, as no strong upside movement has been sighted yet. At this juncture, the bears are still dominating market sentiment. The fact that the commodity is trading below the 50-day SMA line points towards a weak outlook. In addition, we also highlight that the 14-day RSI indicator is situated at 44.00 pts, ie below the 50-pt neutral level. This implies weak market strength, thereby enhancing our bearish view.

The daily chart shows that the bulls are still unable to take the control from the bears. As such, it is best that traders maintain short positions, with a stop-loss pegged above the USD1,331 threshold to limit the upside risk. Recall that our short recommendation was triggered on 16 May, following a strong breach below the USD1,309 level.

Presently, our immediate support is maintained 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. Towards the upside, the immediate resistance is at USD1,309, which was derived from the low of 8 Feb. The next resistance is pegged at the USD1,331 mark, ie the high of 4 Jan.

Source: RHB Securities Research - 14 Jun 2018