Commodities report: gold and crude

The commodities rout continues, with Brent breaking to new multi-year lows and US crude likely to follow.

Oil steam injection plant
Source: Bloomberg

Gold resurgence under threat
The substantial selloff seen in gold yesterday puts significant pressure on the resurgence seen last week. The problem is that for this uptrend to continue, we would need to see a move back above $1089, which seems a long shot. Alternately, an hourly close below $1066 would bring back the bearish view and this seems significantly more likely.

To the upside, we have $1074 and $1077 as near-term resistance, while to the downside we have trend line support to contend with. Given the long upper shadows on the last two hourly candles, which both top off around $1074, a close above that level would be needed to show that gold has enough in it to push higher.

Alternately, a close below $1071 would provide a clue that we could see a selloff back towards $1070 and $1066 support. 

US crude sees brief respite
US crude sold off heavily yesterday as it charges towards the August low of $37.86. Brent has already created a new multi-year low and this seems increasingly likely for US crude.

For now we are seeing a short-term retracement higher, yet given the very shallow slope, it is likely that another leg lower is just around the corner. Thus we are looking for a move back below the $38.63 level to spark another move lower, where support would come in at $38.41 and $37.86. Until we see that, this current grind higher is likely to persist.

Brent marginally regains ground
Brent is also moving higher this morning following on from yesterday’s selloff, with price gradually gaining. This also seems likely to be short-term and a move back below this morning’s support level of $41.23 should be enough to point towards another leg lower for Brent. Given the fact price is at multi-year lows, there are few support levels of note below $40.94.

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