Maintain short positions until the immediate resistance is crossed decisively. The COMEX Gold formed a second consecutive white candle in the latest session, which in the process tested the immediate resistance of USD1,330.80. Intraday tone was positive as it generally scaled higher for the entire session, the low and high were posted at USD1,310.90 and USD1,333, before closing USD16.80 higher at USD1,327.90. As indicated, the commodity has been trading in a multi-month correction phase in a possible flag formation. For now, we are still looking at the firm upside breach of the said immediate resistance to signal an end to the correction phase. Until this happens, we keep to our negative trading bias.

As the bulls have not been able to cross the said immediate resistance, we recommend traders stay in short positions. This was initiated at USD1,281.40, ie the closing level of 17 May. A stop-loss can be placed at USD1,330.80.

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

Source: RHB Securities Research - 4 Jun 2019