Technical analysis: key levels for gold and crude

Gold looks set for short-term weakness, yet with North Korea a continued threat, it makes sense to look for longs. Meanwhile, Brent prices drift lower from a crucial resistance level.

Gold bars
Source: Bloomberg

Gold drifting lower from major resistance

Gold managed to break into a near 12-month high yesterday, following yet another nuclear test from North Korea. However, with the price having only fleetingly traded above the major $1337, November 2017 high, the weakness we are currently seeing provides us with a potential short-term period of downside. The $1332 area gives us a clear support level that would lead to a period of weakness. With the price currently moving below that level, there is a good chance we could see further downside from here.

However, it seems risky to short gold of late, given the potential for a North Korea fueled flight to safety at any moment. As such, further short-term downside would be perceived as a buying opportunity rather than something to sell into.

Brent drifts lower from resistance zone

Brent has been drifting lower since hitting the notable $53.00 resistance region last week. The gradual nature of this move indicates that it could be a short-term weakness before we break higher.

However, until that $53.00 mark is broken, there is a chance we could move lower in a similar manner to that seen over the past month. 

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.

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