Our short call remains intact, as the correction is still in play. The COMEX Gold posted a USD0.60 gain to USD1,232.90 last night, and left a “Doji” candlestick with a longer lower shadow. As the pattern appears at the commodity’s low since Jul 2017, this could be an early signal for the incoming rebound in the later sessions. Nevertheless, as long as we do not see strong upside development, we deem the correction as still in play. Moreover, the fact that the COMEX Gold is trading firmly below the 50-day SMA line points towards a weak outlook. This enhances our bearish view.

The current technical landscape suggests that the bears are still dominating market sentiment. Hence, we recommend traders to maintain short positions. In order to secure part of the trading profits, it best to set a trailing-stop above the USD1,272 mark. This is in line with our short recommendation below the USD1,309 threshold on 16 May.

Our immediate support is maintained at USD1,217, which is located at the low of 9 May 2017. For the next support, look to USD1,207, ie 10 Jul 2017’s low. On the flip side, we keep the immediate resistance at USD1,238, or the low of 12 Dec 2017. The following resistance is found at the USD1,272 threshold, which was obtained from the high of 9 Jul.

Source: RHB Securities Research - 19 Jul 2018