SINGAPORE: Spot gold may retest a support at $1,991 per ounce, a break below which could open the way towards $1,961-$1,978 range. The deep fall on April 14 strongly suggests a completion of a wave (5) from $1,934.19.

This is the final wave of a five-wave cycle from $1,804.20. The cycle itself may have peaked as well. A retracement analysis on the rise from $1,934.19 reveals perfect support of $1,991, which triggered a bounce. It is not very clear how strong the current bounce would be.

A break above $2,005 could confirm the extension of the bounce towards $2,022, which may serve as a limit.

On the daily chart, a bearish engulfing formed between April 13 and April 14.

Spot gold may test support at $1,963

The pattern suggests not only a further fall on Monday but also a reversal of the uptrend from the Feb. 28 low of $1,804.20.

The bearish divergence on the RSI confirms an exhaustion of the rally.

A decent correction is due.