Maintain short positions as the bears are pausing near the immediate support level. The COMEX Gold managed to reverse its earlier session’s weak tone to settle USD7.30 stronger at USD1,562.80. At one point, the immediate support of USD1,552.10 was briefly tested with an intraday low of USD1,551.10. Despite the positive price reaction near the said support level, this can be seen as just a minor pause by the bears – given the previous two sessions’ relatively strong retracement. The current retracement arising from the price rejection near the USD1,600 mark on 3 Feb is still firmly in place. Maintain our negative trading bias.

As the retracement leg still has the potential to extend further, we maintain our short positions recommendation. We initiated these at USD1,555.50, the closing level of 4 Feb. For risk-management purposes, a stop-loss can be placed above the USD1,600 level.

The immediate support is pegged at USD1,552.10, or the low of 21 Jan. This is followed by USD1,542.80, the low of 14 Jan. Towards the upside, the immediate resistance is expected at USD1,575, derived from 4 Feb’s candle. This is followed by the USD1,600 round figure.

Source: RHB Securities Research - 6 Feb 2020