The correction is still likely to extend; maintain short positions. The COMEX Gold continued to trade lower for a second consecutive session. It ended USD15.30 lower at USD1,711.30 after being rejected from the USD1,745 resistance mark in the prior session. With prices continuing to be capped by the USD1,745 resistance, this means the correction phase that started from the high of USD1,788.80 on 14 Apr remains firmly in place. It could even be in the process of extending. Towards the downside, a firm downside breach of the important USD1,700 resistanceturned-support level could open the door for further weakness. We maintain our negative trading bias.

As the correction phase is signalling an extension, 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 revised to the USD1,700.00 round figure. This is followed by USD1,666.20, or the low of 21 Apr. Conversely, the immediate resistance is now pegged at USD1,727.00 – near the latest high – and followed by USD1,745.00, ie near the high of 30 Apr.

Source: RHB Securities Research - 12 May 2020