Tumbles more than 5%; initiate short positions. The COMEX Gold saw a heavy correction, tumbling more than 5% in a single session.The precious metal started the session at USD1,961.70, staying sideways most of the time, until the tide changed around 7pm local time. Once the USD1,950 mark was breached, it plunged below USD1,900 within two hours and stayed near to the USD1,854 session-low for the rest of the session. Towards the close, it settled higher at USD1,869.10. With the latest price action, the 50-day SMA line resistance proved to be too strong for the COMEX Gold. Since mid-September, only two sessions have closed above the 50-day SMA line. With such a wide bearish candle, we do not rule out a possibility of a short-term rebound, but switch over to a negative trading bias.

Our previous long positions – initiated at USD1,917.40, or 3 Nov’s closing level – were closed out at the latest session’s breakeven point. For risk-management purposes, the stop-loss is set at USD1,924.

The downside support is adjusted to USD1,851, which was 24 Sep’s low. This is followed by USD1,842.3, ie the high of 8 July. On the upside, the resistance point is pegged at the USD1,900 round number and followed by USD1,924, which was the high of 4 Nov.

Source: RHB Securities Research - 10 Nov 2020