Initiate short positions. The COMEX Gold dropped below the support levels, closing lower at USD1,875.20. The precious metal saw a heavy selldown over last two sessions. On 28 Oct, it fell from USD1909.80, losing USD43.10 towards USD1,866.70, which was the low of 29 Oct. Based on latest price action, the precious metal has broken the support levels with increased volatility, showing that sentiment has changed. The 20-day SMA line is starting to curve lower, moving in the same southbound direction as the 50-day SMA line. With both moving average indicators pointing downwards, we think this will exert selling pressure on the precious metal. As such, we switch our trading bias from positive to negative.

Our previous long positions, initiated at USD1,903.20 or the closing level of 29 Sep, were closed out at USD1,892.70 during the 28 Oct session. Simultaneously, we initiate short positions. For risk-management purposes, a stop-loss is set at USD1,917.30 – the high of 23 Oct.

The downside support is sighted at USD1,866.70, followed by USD1,851, which was 24 Sep’s low. On the upside, the resistance point is marked at USD1,917.30, followed by USD1,936, or the high of 21 Sep.

Source: RHB Securities Research - 30 October 2020