Stay short, as the correction is still not at its limit yet. The COMEX Gold ended at USD1,212.60 last night and posted a USD5.50 loss. As a result, the commodity dipped below the previous USD1,215 support, which implied that the session was led by the sellers. The bearish bias continues to exert itself, and the correction is likely to extend further. We also note that the 50-day SMA line has dropped by USD1.95 to USD1,263.10. From our technical perspective, this implies a bearish outlook, thereby enhancing our downside view. Overall, the bears are still dominating market sentiment.

As we do not see any strong upside development, this implies that more opportunities are leaning towards the sellers. As such, it is best that traders maintain short positions, with a trailing-stop pegged above the USD1,240 threshold in order to lock in part of the trading profits. Recall that we initially made the short recommendation below the USD1,309 mark on 16 May.

Our immediate support is now at USD1,207, or the low of 10 Jul 2017. This is followed by the next support at the USD1,198 threshold, which is located the low of 10 Mar 2017. Towards the upside, we set the immediate resistance at USD1,215 – the low of 20 Jul’s Bullish Engulfing” pattern. For the next resistance, look to USD1,240, near 26 Jul’s high.

Source: RHB Securities Research - 7 Aug 2018