Maintain short positions. The COMEX Gold rebounded sharply yesterday, rising USD31.00 to reclaim the USD1,800 territory and settle at USD1,808.40. It gapped USD4.60 higher to open at USD1,782. After briefly trading at the USD1,778.60 day low, strong demand lifted prices towards the day high at USD1,812.40. It last traded at USD1,808.40. As suggested in our previous note, the COMEX Gold needs to cross the USD1,800 psychological level to prevent a further decline. However, the commodity is still bound by the downtrend channel, which is exhibiting lower highs and lows. It needs to breach the resistance marked at USD1,827.10 to see a higher high, or – at the minimum – cross the USD1,815 mark to spark an uptrend. Before this can happen, we still see downside risks post the technical rebound and, hence, maintain our negative trading bias.

We recommend traders retain short positions, initiated at USD1,799 or the closing level of 16 Feb. For riskmanagement purposes, the stop loss is set at USD1,815.

The immediate support is revised to the USD1,800 round figure and followed by USD1,756. Towards the upside, the resistance is pegged at USD1,815 and followed by 16 Feb’s high, ie USD1,827.10.

Source: RHB Securities Research - 23 Feb 2021