Maintain short positions. The COMEX Gold retraced lower to test the support level, retracing USD21.50 to settle at USD1,829.90. It gapped USD4.10 lower to open at USD1,847.30, while – during the early session – it rose to test the USD1,856.60 day high. Selling pressure was seen after midday, dragging the commodity to a day low at USD1,822.10, and it closed at USD1,829.90. When compared with the last five sessions, the latest session closed with a bearish candlestick, showing the selling pressure was greater than the buying one. A breach below the immediate support will see the downtrend extending towards the lower support at USD1,810.50. With the RSI trending below the 50% threshold level, momentum is waning, and we will likely see further corrections ahead. As the COMEX Gold is trading below the 50-day SMA line, 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, we set the trailing stop at USD1,865.90.

Downside supports are maintained at 8 Jan’s low of USD1,827.80 and 2 Dec 2020’s USD1,810.50 low. On the upside, the immediate resistance is pegged at 17 Dec 2020’s low of USD1,865.90, followed by USD1,889.40.

Source: RHB Securities Research - 18 Jan 2021