Stop-loss triggered; Initiate short positions. The COMEX Gold failed to hold on to the 50-day SMA line, falling USD30.50 to settle at USD1,833.40 – the sharpest correction since 8 Jan. Yesterday, the precious metal opened at USD1,863.60. After touching the day’s high of 1,866.30, it dived to the day’s low of USD1,830.40 and was last traded at USD1,833.40. Selling pressure was seen at every intraday rebound. Besides the latest session breaching the previous support level, we also observe that the 20-day SMA line has crossed below the 50-day SMA line, indicating that the correction phase has begun. Coupled with the RSI indicator dipping lower, short-term momentum suggests more downward movement. As such, we shift over to a negative trading bias.

Our previous long positions, initiated at USD1,870.20 or the closing level of 20 Jan, were closed out during the latest session after triggering the stop-loss at USD1,842. Conversely, we initiate short positions at the closing level of 2 Feb. For risk management purposes, a stop-loss can be placed at the USD1,867 level.

The immediate support is marked at 11 Jan’s low of USD1,817, followed by USD1,811. Towards the upside, the nearest resistance is pegged at the USD1,850 round figure, followed by 28 Jan’s high of USD1,867.

Source: RHB Securities Research - 3 Feb 2021