Maintain short positions. The COMEX Gold saw sideways consolidation yesterday, retracing USD6.60 to settle at USD1,844.20. The precious metal gapped USD5.40 lower to open at USD1,845.40. During the first half of the session, buying pressure lifted the commodity towards the USD1,864 day high. However, selling pressure emerged during the second half of the session, dragging the COMEX Gold to the USD1,835.80 day low. It then saw the bulls buying on dips, paring losses to close at USD1,844.20. We are keeping our view that the precious metal needs to form a consolidation base near USD1,850 before it can test the upside resistance. Failure to form a base will see more downside risks. As the COMEX Gold is trading beneath both the 20- and 50-day SMA lines, we maintain our negative trading bias.

We recommend traders maintain 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, as well as the USD1,793.30 level. 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 - 13 Jan 2021