Maintain short positions. The COMEX Gold fell below the USD1,800 psychological level, slipping USD43.90 to settle at USD1,791.20. After a brief consolidation, the commodity started the session flat at USD1834.50. Selling momentum was seen at every intraday rebound, pushing prices towards the day’s low of USD1,784.60, before it closed at USD1,791.20. The day range, or difference between the day’s high and low, was USD43.90 – the widest since 8 Jan, indicating heightened selling pressure. The last 10 sessions’ average trading range (ATR) jumped to USD12.70. By extrapolating 2.5x ATR from USD1,791.20, the resistance is marked at USD1,823. As it breached below USD1,800, the precious metal could potentially drift lower towards USD1,778.50 and USD1765.80. Given the bearish sentiment, we are keeping our negative trading bias.

We recommend traders shift to short positions. Our short positions were initiated at USD1,833.40, or the closing level of 2 Feb. For risk management purposes, a stop-loss can be placed at the USD1,867 level.

The immediate support revised to USD1,778.50, followed by USD1,765.80. Towards the upside, the nearest resistance is pegged at the USD1,800 round figure, followed by USD1,823.

Source: RHB Securities Research - 5 Feb 2021