Maintain short positions. Following Thursday’s sell-off, the COMEX Gold rebounded sharply on Friday, climbing USD21.80 to settle at USD1,813. On Friday, the commodity opened higher at USD1,794.30. After briefly touching the day’s low of USD1,792.20, buying momentum lifted prices towards the day’s high of USD1,816. It was last traded at USD1,813. The precious metal has managed to reclaim the USD1,800 territory. If it continues to move higher, a breach of the USD1,823 resistance level could trigger more buying pressure. On the other hand, while the precious metal saw a strong rebound, the RSI, which is trending below 50%, suggests that downside risks remain. The precious metal, which is still moving in a ‘lower highs’ and ‘lower lows’ downtrend channel, is prone for corrrections. Until the stop-loss level is breached, we will keep our negative trading bias.

We recommend traders maintain short positions, which 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 USD1,823 level.

The immediate support is kept at USD1,778.50, followed by USD1,765.80. Towards the upside, the nearest resistance is pegged at the USD1,823 round figure, followed by USD1,841.

Source: RHB Securities Research - 8 Feb 2021