Technical analysis: key levels for gold and crude

Crude tumbles as producers fail to reach an agreement in Doha over the weekend. However, gold gains have been quickly eroded, providing a weaker-than-expected outlook.

Oil steam injection piping
Source: Bloomberg

Gold tumbles despite initial gains
Gold saw a strong gap higher at the open, given the perceived rush to safety. However, this has come to an abrupt end, with a sharp move lower upon hitting the 76.4% Fibonacci retracement.

Given the downtrend in place over the past week, we would need to see a break through $1244 to say this selloff is over. As such, despite the expectation of gains in line with safe haven demand, gold continues to look weak, driven by the negative trade seen this morning.  

US crude rally unlikely to last
US crude is attempting to regain ground following a circa 8% drop at the open today, following on from Sunday’s impasse in Doha. This certainly puts a more bearish slant on proceedings and thus this current rally is expected to represent a short-term bounce before further losses.

Watch the Fibonacci retracements for potential near-term resistance, with $40 and $40.35 the next in view. Below this, support levels are at $38.91, $37.86 and $36.30.

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.