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Gold, Brent prices rally as lumber crashes

The outlook on gold and Brent crude oil remains bullish while the price of lumber is in free-fall.

​Gold trades back above 200-day SMA

Gold’s recovery from Monday’s low at $1,787 has taken it above its one-month resistance line and the 200-day simple moving average (SMA) at $1,838 as high inflation data is seen across the world.

The early May low at $1,851 is now within reach, together with last Thursday’s high at $1,858. Further up lies the April low at $1,873 and the 55-day SMA at $1,918.

Support below the 200-day SMA comes in at Wednesday’s trough at $1,808. Below it sits this week’s low at $1,787 which was made right within the late December-to-January lows at $1,790 to $1,781 which unsurprisingly offered support.

Brent crude oil trades back above 55-day SMA

This week’s slide in the price of Brent crude oil ended at yesterday’s $104.45 low as China prepares to remove all Covid-19 restrictions on 1 June which is expected to lead to an increase in demand.

Traders also continue to monitor developments around a proposed European Union (EU) ban on Russian oil which would tighten global supply further.

Brent crude oil is once more pushing towards its $113.59 to $114.30 resistance area which consists of the April-to-May peaks, a rise and daily chart close above which would lead to the late March high at $120.48 being next in line.

Slips should find support along the 55-day SMA at $108.28 today.

Lumber prices in free-fall

The price of lumber is in free-fall as inflation bites and US mortgage rate rises negatively impact demand for the commodity.

Recent data showed that 54% of US home builders say that higher mortgage rates are having a detrimental effect on their business.

This week’s sharp acceleration to the downside in the price of lumber has come after it hit a one-year high at $1,340 per thousand-feet boards in early March as the industry experienced staff shortages as well as disruptions due to transportation and weather.

As these pressures are starting to ease, and production is even increasing in some areas of the US, the price of lumber is trading back at levels last seen in November with the 78.6% Fibonacci retracement of the August 2021 to March 2022 advance at $647 being in focus.

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