Gold prices could extend their downward correction towards US$4,150 an ounce as weakening technical indicators point to sustained selling pressure, according to RHB Research.
In its latest technical outlook, the research house maintained its bearish trading bias on COMEX Gold after the precious metal declined US$19.70 to settle at US$4,265.10 an ounce in the previous session.
Gold opened at US$4,291.60 before rising to an intraday high of US$4,304.50. It subsequently retreated to a session low of US$4,246.40 before closing at US$4,265.10.
RHB said the lower closing level, coupled with a declining Relative Strength Index (RSI), reinforced its view that bearish momentum remained firmly in place.
The downward turn in the 20-day simple moving average (SMA) was also adding pressure to gold prices, suggesting that the correction could continue in the near term.
RHB identified US$4,150 as the first major support level, followed by US$4,000 should selling pressure intensify.
On the upside, immediate resistance is seen at US$4,400, with the next resistance level at US$4,500.
“Based on the overall technical setup, we will stick with the bearish trading bias,” the research house said.
RHB maintained its recommendation for traders to retain short positions initiated at US$4,284.80, based on the closing price on Sept 23.
It placed the stop-loss threshold at US$4,500 to manage trading risks should gold reverse its current downward trend.
