SINGAPORE: Spot gold may test a support at $1,981 per ounce, a break below which could open the way towards $1,960-$1,969 range. The current consolidation is presumed to have been driven by a wave b, the second wave of a three-wave cycle from $2,048.71.
This wave is expected to be reversed by a downward wave c. The wave b has been unfolding within a wedge, which looks like a bearish continuation pattern, to be followed by a drop. A break above $2,009, however, will confirm the wedge as a bullish pattern, which will suggest a target range of $2,030-$2,049.
On the daily chart, a rising trendline points at a target around $1,923. The sideways move within a narrow range of $1,963-$2,004 could be a preparation for a deep drop.
Spot gold may end bounce below $2,009
The uptrend from the Feb. 28 low of $1,804.20 looks too linear to sustain.
It has to be corrected by a decent drop. Increasing the chance of such a drop is a possible triple-top that develops around $2,073, which suggests a target around $1,600.
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