Technical analysis: key levels for gold and crude

A stronger dollar does little for commodity prices, and this is what we have seen play out in the twelve hours since the Fed decision.

Oil pump at sunset
Source: Bloomberg

Gold hit by hawkish Fed

Unsurprisingly, the Federal Reserve’s shift to a more hawkish stance for next year has done little for gold. The price tested the area around $1133 overnight, so this is the first area of support to watch. Any rally, which may still materialise despite last night’s meeting, would need to push on above $1160 to suggest consolidation rather than further losses are likely.

From here the price needs to clear $1170 and then $1180. Further weakness could see the price head towards $1122 and then $1106. 

Brent resting above key support

Brent crude oil prices have been moving lower all week from their gap up on Friday, and now find themselves resting above key support at $54. A move below here would target $52.55 and then $51.14. Bulls would want to see the price head back above $55, which would open the way to another test of $57. 

WTI to end 2016 on a low?

WTI's push below $52 suggests we are likely to see lower oil prices towards the end of the year. At present the price is oversold intraday, so a bounce could materialise, but overall it looks like a move below $50 is on the cards.

Potential support is possible around $51, $50.25 and then $48.94. A bounce has to get a daily close back above $52, which might then target $53 and $54.35. 

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.