Spot gold TVC:GOLD may retest support at $3,940 per ounce; a break below could trigger a decline to $3,901.
The support caused a consolidation that took the shape of a wedge. Given that the pattern appeared after a downtrend, it may be a bearish continuation pattern, followed by a drop.
Immediate resistance is at $4,002; a break above it may lead to gains into the $4,025-$4,041 range. A further gain would confirm the wedge as a bottom pattern.
On the daily chart, the downtrend looks firm within a falling channel. A projection analysis on the drop from $4,769 marks a target zone of $3,747-$3,839, while another analysis suggests a target of $3,775.
Key resistance is at $4,080, a break above which could suggest a reversal of the downtrend from $4,382.
* Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own. His analyses are exclusively published on the Workspace platform - a London Stock Exchange product.
** No information in this analysis should be considered as being business, financial, or legal advice. Each reader should consult their own professional or other advisers for business, financial, or legal advice regarding the products mentioned in the analyses.