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Technical analysis: key levels for gold and crude

Divergent fortunes for commodities, with investors flocking to gold while crude prices crumble. As gold hits a major resistance zone, could we start to see recent gains unwind?

Gold rings
Source: Bloomberg

Gold breaks into crucial resistance confluence

Gold gained sharply yesterday, as investors went running for cover in the wake of a widespread risk-off move. While the price has broken higher from a symmetrical triangle this morning, it has since pushed into a major roadblock.

The confluence of a descending trendline and the 76.4% Fibonacci retracement provide us with a key hurdle that must be overcome if we are going to carry this rally onwards. As such, an hourly close above $1250 would resume the bullish outlook, whereas an hourly close below $1243 would point towards a period of weakness. 

Gold price chart

Brent challenging major support level

Brent is breaking lower once more this morning, with the price challenging the $50.32 level that marked last week’s low. An hourly close below that level signals a continuation of the downtrend, with further losses expected.

A wider, long-term picture shows the continued creation of higher highs and higher lows on the weekly timeframe. With that in mind, the downturn we are currently looking at could come into support around the 61.8% ($49.60) or 76.4% ($47.50) retracements. However, until we break the latest swing high, further losses seem likely, especially in the event of a break below $50.25.

Brent price chart

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