Spot gold may retrace towards $1,700 before rising

SINGAPORE: Spot gold may retrace towards $1,700 per ounce, before rising into a range of $1,728-$1,739.

The strong surge on Thursday suggests the development of a wave 4, which could travel to $1,739, as pointed by a falling channel.

Three small waves make up the wave 4. The wave “a” seems to have ended around a resistance at $1,721. It will be moderately reversed by the current wave b.

A break above $1,721 could lead to a gain to $1,739. On the daily chart, a bullish engulfing pattern formed between Wednesday and Thursday.

Spot gold may test support at $1,683

This is a reliable reversal pattern, as it appeared above the strong support zone of $1,680-$1,684. Over the next few days, gold may bounce more.