Maintain short positions, as opportunities are leaning more towards the sellers. The COMEX Gold dropped USD4.10 last night to USD1,274.50. It left a black candle, which showed the session was led by the sellers. This weak performance has extended the downside movement and sent the commodity to its YTD low. We believe the present bearish bias is strong, given that no strong rebound movement has appeared. The fact the COMEX gold is trading firmly below the 50-day SMA line implies a weak outlook. Technically speaking, this enhances our bearish view.

As we see the commodity continuing to inch down, this indicates that opportunities are still leaning towards the sellers. Thus, we recommend traders to stay in short positions, with a stop-loss set above the USD1,309 level. This is in order to control the upside risk. Recall that our short call was triggered on 16 May, following a firm breach below the aforementioned USD1,309 threshold.

The immediate support is maintained at USD1,263, or the low of 27 Oct 2017. For the next support, look to USD1,238 mark, which was 12 Dec 2017’s low. Towards the upside, we keep the immediate resistance at USD1,286 – this is located at the low of 21 May. If this level is taken out, the following resistance is found at USD1,309, ie 8 Feb’s low.

Source: RHB Securities Research - 21 Jun 2018