Initiate short positions, as the correction phase has been confirmed. The COMEX Gold staged a strong intraday rebound from a USD1,865 low to settle USD1.60 higher at USD1,940.50. The positive session came following the precious metal’s sharp declines over the past few sessions after the emergence of 7 Aug’s “Bearish Engulfing” formation. In the bigger picture, we believe the commodity is now trading in a correction phase post its recent multi-week upward move, which reached an oversold RSI reading. We have a negative trading bias for now.

Our previous long positions were initiated at USD1,766.40, which was the closing level of 22 Jun – this was closed out at USD2,015 on 10 Aug. Concurrently, we initiated short positions at the USD1,938.90 closing level. For risk-management purposes, a stop-loss can be placed above the USD2,050 threshold.

The immediate support is revised to USD1,910, and followed by USD1,900 – both are derived from the latest candle. Moving up, resistance points are set at USD1,952.30 – the latest high – and USD1,975.

Source: RHB Securities Research - 13 Aug 2020