Maintain short positions as the multi-month correction in still in place. The Comex Gold settled marginally lower by USD1.80 at USD1,289.20. Trading took place in the range of USD1,285.80 and USD1,290.30. The commodity’s recent sessions’ rebound can be seen as just a minor rebound. Broadly, the multi-month correction phase that started from the high of USD1,349.80 on 20 Feb is still considered in place. This correction phase is seen as likely to take the shape flag formation – thus suggesting a good possibility for the immediate support of USD1,267.90 to be tested. Maintain our negative trading bias.

As the correction phase is not showing signs of reaching an end, we recommend traders stay in short positions, initiated at USD1,281.40, the closing level of 17 May. A stop-loss can be placed at USD1,330.80.

Towards the downside, immediate support is expected at USD1,267.90, or the low of 23 Apr. This is followed by USD1,236.50, ie the low of 14 Dec 2018. On the other hand, the immediate resistance is set at USD1,330.80, which was the high of 25 Mar. This is followed by USD1,349.80, or the high of 20 Feb.

Source: RHB Securities Research - 27 May 2019