Initiate long positions, as the thesis for a correction extension has been invalidated. The COMEX Gold formed a white candle to settle USD7.60 higher at USD1,586.40. This crosses above the previous USD1,580.50 immediate resistance, which – in our view – invalidates our previous bias for the commodity to extend its correction phase. The latter is subsequent from the failed attempt to cross above the USD1,600 resistance level on 3 Feb. Premised on this, we switch our trading bias to positive.

Our previous short positions initiated at USD1,555.50, or the closing level of 4 Feb, were closed out at USD1,580.50 during the latest session. As the precious metal may still be able to extend its rebound, we initiate long positions at the latest close. For risk-management purposes, a stop-loss can be placed below the USD1,1,564.40 level.

The immediate support is revised to USD1,575, which was derived from 13 Feb’s candle. This is followed by USD1,564.40, or the low of 12 Feb. Conversely, the immediate resistance is now set at the USD1,600 round figure. This is followed by USD1,619.60, ie the high of 8 Jan’s “Bearish Engulfing” pattern.

Source: RHB Securities Research - 17 Feb 2020