Initiate short positions. After a relatively calm Asian trading session, the COMEX Gold experienced selling pressure during the European and North American trading hours. It hit a low of USD1,788.10 before closing USD24.20 lower at USD1,799.00 – slightly below the USD1,800 round figure. With the downside breach of the USD1,815 level, our previous thesis for the commodity to extend its counter-trend rebound is nullified. This implies that the multi-month correction phase, which started in Aug 2020, is likely to extend. Towards the downside, the minimum expectation is for the commodity to retest 30 Nov 2020’s low of USD1,771.30. We switch our trading bias from positive to negative.

Our previous long positions, initiated at USD1,834.20 or the closing level of 8 Feb, were closed out during the latest session. Concurrently, we initiate short positions at the latest closing. For risk management purposes, a stop-loss can be placed above USD1,825.00.

Support levels are revised to USD1,784.60 and USD1,771.30, while resistance points are set at the USD1,800 round figure and USD1,815.

Source: RHB Securities Research - 17 Feb 2021