Spot gold may retrace into $1,321-$1,331 range

SINGAPORE: Spot gold may retrace into a range of $1,321-$1,331 per ounce, it seems to have peaked around a resistance at $1,351 per ounce.

The resistance identified as the 186.4 percent projection level of an upward wave C from $1,195.90. Even though it is rare that a wave C peaks around its 186.4 percent level, in the case of gold, the resistance at $1,351 is strengthened by another one around $1,348, which is established by a rising trendline. The drop from the Feb. 20 high of $1,346.73 is considered as a reaction to the resistance zone of $1,348-$1,351.

The wave C consists of five small waves. The metal is riding on the fifth wave labeled (5). Given that the third small wave labeled (3) has much extended, the current wave (5) could be more or less over.

On the daily chart, gold is approaching the upper trendline of a huge wedge, and the daily RSI forms bearish divergence. These bearish signals suggest that a deep drop or trend reversal is due.  * Charts are not available in reports received in email box through "Alert". To get charts, use the news code of TECH/C to retrieve the original reports.

** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.

No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.