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Gold, Brent crude, and lumber likely to weaken once again

Gold, Brent crude and lumber look likely to decline further despite the recent counter-trend gains.

Gold Source: Bloomberg

Gold starts the week on a positive footing

Gold experienced a largely negative week just gone, with the gains seen over the beginning of the month fading in favour of the bears.

The wider bearish trend does remain intact, and that is likely to persist as the Federal Reserve (Fed) now knows that we are not seeing a substantial uptick in unemployment.

The rise in core inflation highlights the fact that despite energy prices helping take some of the heat off headline CPI, there are plenty of sticky underlying inflation pressures that the Fed needs to address.

While this week has started on a more positive note, we are likely to see further weakness play out here. As such, near-term upside is there to be sold into, with a rise through the $1684 level required to bring a wider rebound into play.

Until then, bearish positions are favoured here.

Gold chart Source: ProRealTime

Brent crude heads lower despite OPEC cut

Brent crude has been the subject of intense scrutiny of late, with the OPEC decision to slash production by two million barrels per day (bpd) raising fears of another spike in energy inflation.

Comments out of OPEC last night saw Saudi Crown Prince, Mohammed Bin Salman, claim that the decision was not politically motivated and did not reflect a willingness to side with Russia over the US. Quite whether Joe Biden plans to take action in response remains to be seen.

Thankfully we have seen prices drift lower since the 7 October peak, with price having reversed from the 76.4% Fibonacci resistance level at $98.54.

A rise back up through the likes of $94.29 and $97.94 would bring a more positive outlook, with the bears expected to be in charge until then.

Crude oil chart Source: ProRealTime

Lumber rally takes price into notable bearish reversal zone

Lumber has been regaining lost ground over the course of October thus far, with price having managed to push through the crucial historical $460 support level in the process.

However, despite these gains, we are up into a key zone of resistance, with a descending trendline and 76.4% Fibonacci level coming into play here.

The downtrend is clearly defined, and we would need to break up through the likes of $530 and $578 if we are to call a bottom here. Until that happens, this looks to represent a potential area for another bearish reversal to take hold for lumber.

The stochastic oscillator provides yet another signal to watch, with a move back out of overbought (80) bringing a signal that has proven highly reliable over the course of this 2022 sell-off.

Lumber chart Source: ProRealTime

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