Spot gold bearish target $1,596/oz intact

SINGAPORE: A bearish target at $1,596 per ounce is unchanged for spot gold as a top is forming around $1,632.30.

The moderate rise to a high at $1,631.66 during the previous trading session completed the second top of a possible double-top pattern, and it is lower than the Friday high of $1,632.30.

Wave pattern on the hourly chart reveals a wave (5) has peaked at $1,632.30. Based on a Fibonacci retracement analysis on the rise from $1,478 to $1,632.30, an immediate target will be $1,596, the 23.6 percent level.

The bearish divergence on the RSI indicator also strongly suggests a deep correction. But a rise above $1,632.30 will invalidate the bearish outlook.

No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.

Copyright Reuters, 2011