Commodities report: gold and crude

Big selling in commodities yesterday leads to brief respite today. But will it last?

Gold bars
Source: Bloomberg

Gold triangle leads to further losses
Gold continues to suffer, with the resurgence seen earlier in the week leading to yet another strong move lower upon the breakout of a symmetrical triangle. The fact we are now hitting new multiyear lows – on what seems like a daily basis – means support levels are hard to come by.

A crucial support level of note is represented at $1044, marking the 2010 low. However, ultimately the bearish outlook remains and we look for the creation of new lower highs and lows. This outlook remains unless we see a closed hourly candle above $1055, which would point towards some form of short-term recovery.

US crude sells into key support
US crude saw yet another major leg lower yesterday, sparked by the move below the big support level of $42.00. With price having now come into the $40.57 support level and posting a spinning top, there is a chance we could see some short-term bounce.

A closed hourly candle above $41.27 would signal the creation of a short-term high to accompany a higher low. At which point we would be looking towards $41.66 as the next resistance level. However, the overall downtrend is clearly dominant and thus selling seems likely to return soon enough. Support levels of $40.57 and $40.00 are the next in view.

Brent back above resistance
Brent saw strong selling yesterday, bringing price below the crucial $43.26 level. This meant the creation of a new three-month low. However, with price having first found resistance at $43.26 and subsequently broken through it, there is a possibility of a bounce from here.

A close above $43.79 would bring a bullish short-term bias, with $44.37 the next key resistance level. A close back below $43.26 would bring back the bearish bias determined by the long-term bear market. The next key support level below $43.26 is $42.50.

The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.