50-day SMA line is still being challenged; maintain long positions. The COMEX Gold ended the latest session on a positive tone. During the session, the commodity flirted with the 50-day SMA line (current reading of USD1,212) with a high of USD1,213.20 – repeating the similar behaviour observed over the past three weeks. The low was recorded at USD1,205.10, before ending at USD1,211.30, indicating a gain of USD3. Looking at the broader picture, the commodity is extending its consolidation phase, which has been in development over the past 3.5 weeks, below both the immediate resistance of USD1,215 and the said SMA line. This implies that the odds are in favour of the index extending its rebound that started from the low of USD1,162 on 16 Aug. Based on these developments, we maintain our near-term positive trading bias.

As the positive trend that was formed since the low of USD1,162 continues to show signs of sustaining, we continue to advise traders to keep long positions on the COMEX Gold. Recall that we initiated these positions after the commodity breached above the USD1,207.60 mark on 12 Sep. For risk management purposes, a stoploss can be set at below the USD1,184 threshold.

Immediate support is pegged at USD1,184, which was the low of 24 Aug. This is followed by the USD1,162 critical support registered on 16 Aug – this was also the YTD low. On the downside, the immediate resistance is at USD1,215, or the low of 20 Jul. This is followed by the USD1,239 level, ie 26 Jul’s high.

Source: RHB Securities Research - 21 Sept 2018