Maintain long positions. The COMEX Gold bulls took a breather last Friday, inching USD1.50 lower from Thursday’s session to settle at USD1,888.90. Underpinning the positive momentum from that day, the commodity opened at USD1,891.30 last Friday. However, the bulls were missing during first half of the session, which saw the bears dragging the precious metal to the USD1,881.90 day low. The bulls then pared the losses and pushed the COMEX Gold higher to close at USD1,888.90. For the counter-trend rebound move to sustain, we need to see the gap between the 20- and 50-day SMA lines narrowing. Notice that the RSI indicator has climbed above the 50% threshold, indicating the bulls are gaining traction, which will likely lead the 20-day SMA line higher after the consolidation completes. Since the downside support is intact, we stick to our positive trading bias.

We recommend traders maintain long positions. We initiated such positions at USD1,859.10, or the closing level of 16 Dec. For risk-management purposes, a stop loss can be set below the USD1,848 level.

The downside support is marked at the USD1,850 round figure and followed by USD1,820. On the upside, the immediate resistance is pegged at 16 Nov’s high – USD1,898 – and followed by 3 Nov’s high, ie USD1,912.20.

Source: RHB Securities Research - 21 Dec 2020