Gold might have carved a potential top around $1986 levels yesterday. The yellow metal had also dropped to $1960 support before pulling back. Bears might be poised to resume lower as long as prices stay below $1986 mark, going forward.
Gold has ruled out a larger degree zigzag structure after breaking above $1920 lows recently. The metal still remains vulnerable for a bearish reversal even though it has hit $1986 yesterday. It could be preparing for an expanded flat corrective structure.
Looking at the lower degree wave structure, we need to see a 5 wave drop on the hourly chart to confirm the first step towards potential bearish reversal. Immediate support is seen through $1940, followed by $1907/10, while resistance is at $1986 respectively.
A break below $1940 and further is required to confirm a meaningful top in place at $1986 mark. Gold would be considered good to be sold on rallies thereafter. At the moment, conservative traders might remain flat.
We would like to bring another price action which is indicating bearish divergence. Silver is trading at 50% value of its 2011 highs, while Gold prints fresh highs around $1986. This is also considered to be bearish divergence and a potential trend reversal might be near.
Either way, upside is limited for Gold from current price ($1975) and it remains vulnerable for a huge bearish reversal anytime soon. Aggressive traders might remain short from here.
Short against $1990, target remains open.