Technical analysis: key levels for gold and crude

Gold is heading into a crucial area of support, with a bounce needed if we are to avert a sharp sell-off. Meanwhile, Brent crude could give us a buying opportunity after yesterday’s break higher.

Gold heading towards critical support zone

Gold has continued its decline, with the failure to break through $1326 leading us to yet another move to the downside. This has brought us within reach of the crucial $1307 support level.

The $1303-$1307 zone represents the lower boundary of a four-month range, where a break below would likely spark a strong move lower for gold. Until this happens, there is a good chance we will see another move higher before long. Look out for the creation of a new higher high to signal the beginning of a bullish phase. That would currently come with a break through the $1320 swing high.

Brent retracing after yesterday’s breakout

Brent attempted to break free from the recent period of consolidation, with the price hitting a new three-year high.

However, this move has proved fleeting, with the price now turning lower. This could provide us with a good opportunity to go long on this market, with Fibonacci retracements coming into play as potential buying levels. Thus, watch for the 61.8% ($73.86) and 76.4% ($73.46) retracements for that purpose. A break below $72.49 would negate this bullish short-term view and bring us back into the consolidation phase.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.