Maintain short positions. The COMEX Gold saw a rebound after last Friday’s sell-off session, recovering USD15.40 to settle at USD1,850.80. During the first trading session of the week, the precious metal gapped USD14.00 higher to open at USD1,849.40. However, selling pressure emerged during the first half of the session and dragged the commodity to the USD1,817.10 day low. It then saw buying pressure emerging, paring losses to close at USD1,847.40 – forming a Hammer pattern. From the lastest price action, the bulls demonstrated greater strength than the bears, and we do see physcological support at USD1,850. Nevertheless, due to a long bearish candle left over from last Friday, we think the COMEX Gold needs to form a consolidation base below USD1,850 before it can challenge the upside resistance. Hence, we keep to our negative trading bias.

We recommend traders stick to short positions. We initiated these at USD1,908.60, or the closing level of 6 Jan. For risk-management purposes and profit protection, we set the trailing stop at USD1,965.90.

Downside support is maintained at 2 Dec’s low of USD1,810.50 and followed by USD1,793.30. On the upside, the immediate resistance is pegged at 17 Dec’s low of USD1,865.90 and followed by USD1,889.40.

Source: RHB Securities Research - 12 Jan 2021