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Gold price rises for a fifth day as Brent and lumber slide

The outlook for gold remains bullish as Brent crude oil and lumber slide.

​Gold rises for a fifth consecutive day

Gold’s recovery from last week’s low at $1,787 has taken it to above its one-month resistance line and the 200-day simple moving average (SMA) at $1,839 to this week’s high at $1,865 after four straight days of gains amid heightened geopolitical tensions and by taking cues from a stabilising US dollar.

The April low at $1,873 is now within reach, above which the early may high and 55-day SMA can be seen at $1,909 to $1,913. Support below the 200-day SMA and the 17 May high at $1,839 to $1,836 can be spotted along the breached two-month downtrend line at $1,821.

Brent crude oil eases on demand concerns

After three consecutive higher daily closes in the price of Brent crude oil a slide is currently being witnessed as fears of a possible global recession and challenging demand outlook bite.

Business and political leaders mentioned the risk of a worldwide recession at the annual Davos economic summit amid multiple threats to the world economy.

Today’s slide in the price of Brent crude oil is taking it back towards the 55-day SMA at $107.94 below which last week’s low can be spotted at $104.45.

A still possible rise above this week’s high at $112.14 would re-engage the $113.59 to $114.30 resistance zone which consists of the April-to-May peaks, a rise and daily chart close above which would lead to the late March high at $120.48 being targeted as well.

Lumber prices continue their swift descent

The price of lumber is in free-fall as inflation bites and US mortgage rate rises negatively impact demand for the commodity.

Recent data showed that 54% of US home builders say that higher mortgage rates are having a detrimental effect on their business. The sharp drop in the price of lumber has taken it to the 78.6% Fibonacci retracement of the August 2021 to March 2022 advance at $647, an over 50% drop from its March one-year high at $1,340 per thousand-feet boards, back when the industry experienced staff shortages and disruptions due to transportation and weather.

As these pressures have eased, and production is even increasing in some areas of the US, the price of lumber is trading at six-month lows with the late November low at $622 and early November 2021 low at $592 representing possible downside targets for the days ahead.

Resistance above the minor psychological $700 mark can be spotted at last week’s gap seen between $715 and $729 as well as at the 12 May low at $740.


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