Technical analysis: key levels for gold and crude

A stronger dollar continues to hurt gold, while oil prices look to claw back some losses in the wake of yesterday’s inventory report.

Gold bullion
Source: Bloomberg

Gold pounded by dollar ascension

The steady ascent of the dollar continues to hit gold, which has hit its lowest level since late June. So far the $1305 support level continues to hold, but if this fails then $1257 becomes the next area to watch.

The best hope for gold bulls would be a weak non-farm payrolls reading tomorrow that takes some of the fight out of the greenback. Even so, the downtrend is still in place so the approach would still seem to be to sell the rallies, up towards $1320. 

Gold price chart

Brent caught in a downtrend

Having seen a sharp drop yesterday thanks to oil inventories, the price has retraced slightly. However, the price remains stuck in a downtrend, so any sharp rally, perhaps back towards the 50-hour simple moving average (SMA) at $48.34, could bring out fresh sellers.

With a RSI that has only just moved below 50 there is arguably still plenty of downside, perhaps as far as $44 should the dollar rally gather pace. A move above $49 might change the outlook, putting the price back on course for the August high at $50.90. 

Brent crude price chart

WTI looks to revive bullish outlook

The price closed below the 50-day SMA ($45.29) yesterday, for the first time since 15 August. Some support might arise at $44.42, where the price bounced in mid-July, but a close below here could leave it at risk of a dip back to the August low at $39.25. It would require a move back above the 100-day SMA ($46.17) to revive the bullish outlook here. 

WTI crude price chart

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