SINGAPORE: Spot gold may test a resistance at $1,291 per ounce, a break above which could lead to a gain to the next resistance at $1,299.
These resistances are identified as the 50 percent and the 38.2 percent projection levels of a downward wave C from $1,324.33. A falling trendline suggests a further gain to $1,291.
The pattern from the April 23 low of $1,265 looks like a flat, which consists of three waves that are roughly equal. Under this scenario, the gain may be limited to $1,291.
The pattern may turn out to be a double-bottom, which will be confirmed when gold breaks $1,291. It indicates a target around $1,310. A fall below $1,277.65 would signal a continuation of the wave C towards $1,267.
On the daily chart, gold has cleared a resistance at $1,283. It may rise towards $1,307, the 23.6 percent retracement of the uptrend from $1,180.34 to $1,346.73. Based on this analysis, a double-bottom could be forming around $1,264.
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** 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.