Technical analysis: key levels for gold and crude

As risk appetite wanes, it's provided gold with some respite amid recent selling. However, with US crude at a key level, there is a good chance we could resume the risk-on sentiment soon enough.

Oil plant
Source: Bloomberg

Gold rallying after sharp pullback

Gold is benefitting from the weakening in risk sentiment this morning, rallying into the $1244 region. The key thing we need to see for this downturn to be over is a closed hourly candle above $1250.

That is still some way away and thus the bearish view remains until then. Of particular interest is the 76.4% retracement ($1245.5) should price pass this $1244 level. Support levels to note are $1240, $1232 and $1229. 

US crude at notable support level

US crude has been drifting lower after the strong rally that dominated the first half of the week. However, interestingly, we are at a crucial junction, with a major long-term 61.8% Fibonacci pullback, alongside the March peak both around the current price.

As such, how this market responds in the coming hours will likely dictate the state of play going forward. Given the weakness we have been seeing, a closed hourly candle above $43.42 would be required to provide a renewed bullish signal. Until then, there is a chance we could see this continue to drift lower.

Support levels of note are $41.44 and $41.11. Resistance levels to watch are $42.82 and $43.42.

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