Best to stay short, as opportunities are still leaning more towards the sellers. The COMEX Gold rebounded by USD19.30 to USD1,208.60 at the end of last Friday’s session. A white candle that breached the previous USD1,200 resistance was formed and led the commodity to its newest 1-week high. However, this does not change our bearish view, given that no strong upside development has been sighted yet. We also note that the 14-day RSI indicator is fluctuating below the 50-pt neutral level. This implies that market sentiment is still weak, thereby enhancing our downside view.

At this juncture, we believe the opportunities are still leaning more towards the sellers. As such, traders are advised to stay in short positions. In order to secure part of the trading profits, we advise setting a trailing-stop above the USD1,215 threshold. For the record, we initially made the short recommendation on 16 May after a firm breach below the USD1,309 mark.

Our immediate support is now at USD1,200, ie near the high of 14 Aug. If this level is taken out, the following support is pegged at the USD1,162 critical mark, or the low of 16 Aug. Conversely, we set the immediate resistance at the USD1,215 mark, which was the low of 20 Jul’s “Bullish Engulfing” pattern. This is followed by the USD1,239 resistance, or 26 Jul’s high.

Source: RHB Securities Research - 27 Aug 2018