Best to stay short, as market sentiment remains weak. The COMEX Gold jumped USD64 last night to USD1,236.40 and left a white candle. During the session, the commodity rose to its intraday high of USD1,238.60 and tested the USD1,238 resistance. However, this does not negate our downside view, given that no strong upside development has been sighted yet. As a result, the bullish bias in the appearance of 27 Jul’s reversal “Bullish Engulfing” candlestick pattern remains unconfirmed. We also highlight that the 14-day RSI indicator continues to fluctuate below the 50-pt neutral level at 36.60 pts. This reflects a weak market sentiment, thereby enhancing our bearish view.

In line with our negative outlook, it is best that traders maintain short positions. In order to secure part of the trading profits, we advise setting a trailing-stop above the USD1,272 threshold. For the record, we initially recommended that traders enter short on 16 May. This was after a strong downside development below the USD1,309 mark.

Our immediate support is kept at USD1,217, which is located at the low of 9 May 2017. For the next support, look to USD1,207, or the low of 10 Jul 2017. Conversely, the immediate resistance is found at USD1,238, ie the low of 12 Dec 2017. If this level is taken out, the following resistance is found at USD1,272, which is derived from the high of 9 Jul.

Source: RHB Securities Research - 26 Jul 2018