No confirmation for the “Bearish Engulfing” formation yet – maintain long positions. The COMEX Gold added USD4.20 to settle at USD1,296.40 in the latest trade after having oscillated between a low and high of USD1,290.70 and USD1,303.20. The positive session implied that the “Bearish Engulfing” formation – which appeared on 4 Jan – is still unconfirmed. As such, the risk to the commodity’s upward move is considered low for now. The said formation appeared after the precious metal experienced a multi-week upward move, which saw its daily RSI recently hitting the overbought area. Until the said negative formation is confirmed by a firm breach of the USD1,284.60 immediate support, however, we keep our positive trading bias.

As there is still no clear technical evidence that signals a deeper retracement may be taking place, we continue to recommend traders keep long positions, which we initiated at the USD1,216 mark – this was 14 Nov’s closing level. For risk-management purposes, a stop-loss can be placed below the USD1,284.60 threshold.

We are still expecting the immediate support to emerge at USD1,284.60, ie the latest session’s low. The second support is at USD1,267.40, or the low of 21 Dec 2018. Moving up, immediate resistance is pegged at USD1,332.40, which was the high of 11 May 2018. This is followed by USD1,370.50, ie the high of 25 Jan 2018.

Source: RHB Securities Research - 8 Jan 2019