Technical analysis: key levels for gold and crude

A weakening dollar has given commodities breathing space, with both oil and gold managing to rally off the lows of last week.

Source: Bloomberg

Gold set for further gains

So far the price is replicating the action seen at the end of August, namely a rounding bottom near to the key $1300 level. The $1300/$1305 region is where losses have run out of steam since late June, with the support level being the resistance level from the end of April/beginning of May.

Now it needs to push through $1325 (the highs from 14/15 September) to confirm that the buyers are back in charge. Until the price moves below $1300 it looks like further gains are likely, but the strong uptrend of 2016 is beginning to look under serious threat.

Gold chart

Brent looks to move higher

$46 was the key support level last week, while the $45.44 level that started the bounce at the beginning of the month remains untested. Thus we have two vital areas to watch.

For the moment, with risk appetite recovering across the board, we may see the price push on above the 50-day simple moving average ($46.90), and move on through Thursday’s high at $47. A move from here would head towards $47.50 and then the 11 September high at $48.82. 

Brent chart

WTI could see bullish momentum grow

Last Friday saw the price head towards, but stay above, the $43.22 level that acted as support at the beginning of the month. If the price moves higher from here then we will need to see a daily close above $44.50 to confirm bullish momentum, and then on through the zone $44.85-$45.20.

Above here $47 and then $48 become the next targets, while a drop through $43.22 would see the rising trendline off the February lows tested (the 200-day SMA at $42.97 may also come into play as support). 

WTI chart

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