Stay short, in line with the ongoing retracement. The COMEX Gold ended at USD1,278.60 last night and posted a USD1.50 loss. During the session, the commodity rose to its intraday high of USD1,286.80 and tested the USD1,286 resistance before sellers took control of market sentiment from the buyers. We now see the COMEX Gold trading at a more than 4-month low. In the absence of any strong upside movement, this implies the retracement could still extend further. This is also supported by the fact that the commodity is firmly situated below the 50-day SMA line – an indication of a weak outlook. Overall, opportunities are leaning more towards the sellers.

We believe the bearish bias in the appearance of 15 May’s long black candle is still exerting itself. Hence, in line with the ongoing retracement, it is best that traders maintain short positions. For risk-minimisation purposes, we advise setting a stop-loss above the USD1,309 threshold. For the record, our initial short recommendation was triggered below the aforementioned USD1,309 level on 16 May.

We set the immediate support at USD1,263, which is located at the low of 27 Oct 2017. The following support is pegged at the USD1,238 mark, or the low of 12 Dec 2017. Conversely, our immediate resistance is maintained at USD1,286, which was the low of 21 May. The next resistance is pegged at the USD1,309 threshold – this was derived from 8 Feb’s low.

Source: RHB Securities Research - 20 Jun 2018