Maintain long positions. The COMEX Gold started the year with a strong rally, surging USD51.50 to close at USD1,946.60. The precious metal saw a gap up at the opening, jumping USD13.10 to start at USD1,908.20. The commodity tested the day low of USD1,906.10, and positive buying interest was seen throughout the session, lifting it towards the USD1,948.70 day high. With the latest price action, the 20-day SMA line has crossed the 50- day SMA line, signalling that the correction phase – which started in Sep 2020 with the Bearish Crossover – has ended. The commodity is poised to challenge the overhead resistance levels, marked at USD1,950 and USD1,966.10. We expect profit-taking activities or minor corrections ahead, as the commodity trends higher. As long as it trades above the moving averages, we will maintain our positive trading bias.

We recommend traders maintain long positions. We initiated these at USD1,859.10, or the closing level of 16 Dec 2020. For risk-management, a trailing-stop can be set below USD1,880.

Downside support is marked at the USD1,900 round figure, followed by USD1,860.90. On the upside, the immediate resistance is pegged at the USD1,950 round figure, followed by 9 Nov’s high of USD1,966.10.

Source: RHB Securities Research - 5 Jan 2021