Our short call remains in play, as the commodity is still in correction mode. Based on the weekly chart above, we see that the COMEX Gold is still on a short-term downtrend. Presently, we believe that the bears are in firm control of market sentiment. Note that the commodity is currently trading below the 50-week SMA line – an indication that market sentiment is weak. Moreover, the fact that the 14-week RSI indicator is above the 30-pt oversold level implies that there is more room for the correction ahead. All these negative indicators enhance our downside view.

In the absence of a strong upside movement, we believe that the COMEX Gold has not found its bottom yet. As such, we maintain our short recommendation, with a trailing-stop set above the USD1,286 mark to lock in part of the trading profits. Recall that we initially made the short recommendation below the USD1,309 threshold, on 16 May.

We keep the immediate support at USD1,238, obtained from the low of 12 Dec 2017. For the next support, look to USD1,217, ie 9 May 2017’s low. Towards the upside, our immediate resistance is at USD1,263, located at the low of 27 Oct 2017. If this level is taken out, the next resistance is found at the USD1,286 threshold, derived from the low of 21 May.

Source: RHB Securities Research - 5 Jul 2018