COMEX gold extended its counter-trend rebound on Friday, rising US$46.70 to close at US$4,202.30, is this a sign that the precious metal is recovering after a long slump?
According to RHB Research the rebound is just a temporary upswing and has maintained a negative trading bias noting that the broader technical indicators remain weak.
The precious metal opened at US$4,190.10 and traded between an intraday high of US$4,222.80 and a low of US$4,169.40 before settling higher.
RHB said the latest positive price action has yet to reverse the broader bearish setup, with the Relative Strength Index remaining below the 50% level, indicating that bullish momentum is still weak.
The research house also noted that the Bearish Marubozu formed on Sept 28 remains intact, while gold continues to trade below both its 20-day and 50-day simple moving averages.
RHB therefore maintained its short position initiated at US$4,284.80, the Sept 23 closing level, with a stop-loss set at US$4,400.
Immediate support is seen at US$4,000, followed by US$3,800.
On the upside, resistance is pegged at US$4,300, followed by the stronger US$4,400 level.
RHB said the technical outlook would remain bearish unless COMEX gold is able to decisively break above the US$4,400 resistance.
