SINGAPORE: Spot gold may bounce into a range of $1,951 to $1,958 per ounce, as it has stabilized around a support at $1,934. A short falling channel is used for calculating the bounce target, assuming that the bounce is roughly equivalent to the one from the Monday low of $1,965.40.

Besides setting the bounce target, a more important task is to find out whether the uptrend from $1,809.27 has reversed. The depth of the fall from $2,009.59 and the wave pattern suggest a reversal. Based on the classical pattern theory, however, the conclusion could be too early.

Generally, market would climb towards the preceding high and starts to reverse after failing to go above this high. Support is at $1,934, a break below could be followed by a drop into the $1,913-$1,924 range. On the daily chart, an evening star formed between March 17 and March 21. It confirmed a false break above a falling trendline.

Spot gold to retest support at $1,971

The chance of the uptrend extension has been ruined. The support at $1,939 may help trigger a weak bounce. Only when gold breaks $1,963, could the extension of the uptrend be reconsidered.