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Technical analysis: key levels for gold and crude

A rising dollar is putting pressure on commodities, with gold and oil both falling.

Gold bars
Source: Bloomberg

Gold dips but continues to outpace Dow

Yesterday’s spike in stocks meant the gap in performance since January between gold and indices has been narrowed somewhat, but the yellow metal is still outpacing the Dow Jones in gains for the year. A drop yesterday brought out fresh buyers, and the price is still solidly within the uptrend from the December lows.

As long as $1235 holds and the price bounces off the trendline then more gains are to be expected. Longer-term, the price must break the 200-day simple moving average at $1261.

Gold price chart

WTI under pressure

Talk of rising output, and reports that Russian February output was unchanged from a month earlier have combined with the rising US dollar to put pressure on WTI prices. Bears should avoid getting too excited unless we see a firm drop through $52, but for now they do have the upper hand. Support since mid-February has been found around $53.20, so it will need a break below here to really get momentum going.

The failure to push above $54, which has been the case really since early December, raises the possibility that we could be on the cusp of a bigger drop. 

Oil price chart

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