SINGAPORE: Spot gold may bounce to $1,783 per ounce, before resuming its fall towards $1,766. The drop on Monday was too sharp to sustain. Even though it is deep enough to confirm a reversal of the uptrend from $1,738.50, it is still subject to a bounce.
Given that gold has briefly pierced above $1,774, it is highly likely to extend its gains to $1,783.
A further gain, however, could signal an extension of the uptrend towards $1,810.
A break below $1,766 could open the way towards $1,739-$1,755 range. On the daily chart, there was a false break above a resistance at $1,788.
A bullish target of $1,842 has been temporarily aborted. It will only be resumed when gold stands firm above $1,788.
Spot gold may rise into $1,816-1,825 range
The current pattern looks like a rising wedge, which indicates an extension of the uptrend towards $1,820.
The shooting star forming between Dec. 1 and Dec. 5 sends a conflicting signal that the uptrend from the Nov. 3 low of $1,655.59 has reversed.
A close of the market above $1,788 on Tuesday or below the lower trendline of the wedge around $1,758 could suggest a direction.
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