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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Gold price and Brent crude price start to fade after recent gains

Gold and Brent crude start to ease back after yesterday's sharp gains, yet such short-term weakness could be a buying opportunity.

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Gold starts to lose momentum after sharp gains

Gold has continued its ascent towards the record highs of $1921, with the price managing to surge higher over the course of the week thus far.

This is just one part of a wider precious metals outperformance that comes in a week that has seen both the European Union (EU) and US push for another substantial stimulus plan. Nevertheless, we are starting to see signs of potential short-term exhaustion, with the price currently easing back. Watch for the stochastic to break below 80 as a potential signal of impending downside.

Nevertheless, even if we do see the price of gold decline in the near term, it is highly likely that such a move would simply be another retracement and precursor to another bullish turn. As such, any short-term downside is simply perceived as a retracement, with a bullish outlook in play unless the price breaks below $1796 support.

Gold price chart Source: ProRealTime
Gold price chart Source: ProRealTime

Brent pulling back after recent bullish breakout

Brent crude has started to ease back after the recent bullish surge through the $43.91 resistance level.

That break signals the end of this recent ascending triangle formation, with further gains likely to come into play despite the current move lower. Given the bullish breakout seen yesterday, this current move lower is expected to be short term in nature, with another leg higher likely to come before long. As such, watch for support on either the $43.91 breakout level, or a Fibonacci retracement.

Brent price chart Source: ProRealTime
Brent price chart Source: ProRealTime

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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