SINGAPORE: Spot gold may bounce more into a zone of $1,960-$1,979 per ounce, as it has found a strong support at $1,890.
The support is provided by the 61.8% retracement of the uptrend from $1,779.20 to $2,069.89. It is strengthened by a similar one of $1,891.
The strong reaction of the market to these supports indicates a reversal of the downtrend from $2,069.89.
Immediate support is at $1,929, a break below which may cause a fall into $1,903-$1,917 range.
On the daily chart, the fall from $2,069.89 is presumed to have been driven by a wave C, the third wave of a three-wave cycle from $2,072.50.
A projection analysis on this wave reveals a strong support at $1,918, around which a bullish hammer formed on Wednesday.
This is a typical reversal signal. The metal may rise towards $1,976.
The downtrend from $2,069.89 remains intact. It may resume upon the completion of the bounce.
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