Maintain short positions. The COMEX Gold saw a surprise reversal yesterday, rising USD23.20 from the previous session to settle at USD1,855.30. The commodity had a flat opening – starting at USD1,830.50 – but, soon after, sentiment turned bullish. This saw the bulls gradually pushing the precious metal higher, touching the day high of USD1,859.30 and settling at USD1,855.30. Based on yesterday’s price action, the long white candle body indicates an early signal that sentiment is shifting towards bullish. The momentum also turned positive, as the RSI climbed above the 50% threshold level. If the COMEX Gold can climb above the USD1,859.30 resistance, the rebound may extend higher towards the 50-day SMA line. Otherwise, it may be perceived as a failed signal and retrace lower to the 20-day SMA line. Until the stop loss is breached, we maintain our negative trading bias.

We recommend traders maintain short positions. We initiated these at USD1,838.50, or the closing level of 9 Dec. For risk-management purposes, a stop loss can be set above the USD1,860 level.

Downside support is marked at 14 Dec’s low of USD1,820 and followed by USD1,800. On the upside, the immediate resistance is pegged at the recent high of USD1,859.30 and followed by USD1,879.80.

Source: RHB Securities Research - 16 Dec 2020