Maintain short positions. After experiencing two consecutive rebound sessions, the COMEX Gold ended the latest one USD1.40 lower at USD1,718.90. In the broader picture, we believe that, as long as the precious metal is still capped by the USD1,745 resistance point, the ongoing correction phase – which started from the high of USD1,788.80 on 14 Apr – is still likely to extend. Toward the downside, this correction has the potential to test the USD1,666.20 support level. This ongoing correction phase set in after the commodity experienced a relatively strong upward move between mid-March and mid-April. We maintain our negative trading bias.

As the bias for the COMEX Gold to re-test the USD1,666.20 support level remains high, we advise traders to stay in short positions. These were initiated at USD1,701, or the closing level of 30 Apr. For risk-management purposes, a stop-loss can be placed above the USD1,745 threshold.

The immediate support is eyed at the USD1,700 round figure. This is followed by USD1,666.20, or the low of 21 Apr. Conversely, the immediate resistance is eyed at USD1,745, which is near the high of 30 Apr. This is followed by USD1,765, ie near the high of 23 Apr.

Source: RHB Securities Research - 6 May 2020