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Spot gold may retest a support at $1,756 per ounce, as it faces a strong resistance at $1,770.
The resistance is identified as the 100 per cent projection level of an upward wave, which may either end around this barrier or extend a lot to $1,806.
Even though the upper channel suggests a target of $1,806, gold failed to break $1,770 in its first attempt on July 29. The failure at least suggests the start of a correction.
A break below $1,756 may trigger a drop into $1,741-$$1,747 range, while a break above $1,770 could lead to a gain into $1,778-$1,784 range.
On the daily chart, a retracement analysis on the fall from $1,857.29 reveals a resistance at $1,769, which is working together with the one at $1,770 on the daily chart, to stop the rise.
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The expected correction looks like a pullback towards the former resistance at $1,748 and a falling channel.
(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.)
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