SINGAPORE: Spot gold may retest a resistance at $1,994 per ounce, probably after a correction to a support zone of $1,960-$1,966. The metal is consolidating within a wedge.
The rise on Monday makes this wedge looks more like a bullish continuation pattern, to be followed by a round of rallies.
The current speculation is that the metal may remain sideways within the wedge for one or two days, in a way of falling towards the lower trendline again before rising.
However, the pattern may prove to be bearish as well, if gold breaks $1,960 and fall further.
Spot gold may fall towards $1,927
On the daily chart, the consolidation range is bigger, from $1,939 to $2,004.The consolidation is being shaped into a triangle, which may form a bullish pennant together with the preceding rise.
It must be noted that the triangle is generally less reliable.
An escape from the range is needed to confirm the following direction.