Maintain short positions. The COMEX Gold failed to establish a foothold near the USD1,700 level, closing at USD1700.70 – a level near its 8-month low. The commodity opened weaker at USD1,708.40, and hovered near the USD1,721.60 high for most of the session. Later, prices reacted negatively to the Federal Reserve Chairman’s views on the inflation outlook, falling the USD1,700 threshold to a low of USD1,687.60, before settling at USD1,700.70. As it has fallen below USD1,700, we may see the commodity correct further towards USD1,665 – or at least test the USD1,685 level. The precious metal needs to reclaim the USD1,750 threshold to stage a meaningful technical rebound. As the commodity remains in a downtrend, and a reversal pattern is yet to be seen, we maintain our negative trading bias.

We recommend traders maintain the short positions initiated at USD1,799, or the closing level of 16 Feb. For risk management purposes, the trailing-stop is revised to USD1,750.

The immediate support is revised to USD1,685, followed by USD1,665. Towards the upside, the resistance is pegged at the closing price of 26 Feb, or USD1,728.80, followed by USD1,750.

Source: RHB Securities Research - 5 Mar 2021