Keep short, as the bears are in firm control. The COMEX Gold posted a USD3.80 loss last night to USD1,256.10 and left a black candle. This weak performance sent the commodity to a fresh 6-month low. The bearish bias continues to exert itself and, although we see an oversold situation – the 14-day RSI indicator was situated below 30-pt mark at 26.86 pts on 26 Jun – no immediate rebound has been sighted. Technically speaking, this implies the bears are in firm control of market sentiment. Thus, we make no change to our downside view.

In line with the ongoing retracement, it is best that traders maintain their short positions. We recommend setting a trailing-stop above the USD1,286 mark so that part of the trading profits is secured. For the record, we initially made the short call on 16 May after a firm downside development, where the COMEX Gold’s price plunged below the USD1,309 threshold.

To the downside, we set the immediate support at USD1,238, or the low of 12 Dec 2017. This is followed by the USD1,217 support, which was the low of 9 May 2017. Conversely, the immediate resistance is maintained at USD1,263, ie 27 Oct 2017’s low. In the event this level is taken out, the next resistance is seen at USD1,286, which is located at 21 May’s low.

Source: RHB Securities Research - 28 Jun 2018