Technical analysis: key levels for gold and crude

A weakening dollar has proved to be a boon for commodity prices, which are moving higher once again.

Gold bars
Source: Bloomberg

After two days of losses gold has recovered, with a test of the $1307 area yesterday seeing fresh buying momentum. Now the price needs to push above $1340 in short order to confirm that more gains are on the way.

As before, a drop through $1307 and then $1300 would raise the risk of a move back to $1263 and the 50-day simple moving average (SMA).

The bounce is still intact here for Brent, and if we can close above $50 today then the way looks clear to test $51 and then the June high at $52.80.

It has proven unwise to underestimate this rally, which has continued despite Brexit. However, it now needs to create a fresh high above $53 to indicate that the consolidation has run its course. 

A move through the key $48.50 area will confirm there is more to come, with the next areas to watch being $50 and then the June high around $51.50.

As with Brent, we need to see fresh highs for the year to indicate the uptrend is still intact. For now the price is likely to push higher, given the double bounce this month off the $46.40 area. 

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