Technical analysis: key levels for gold and crude

Gold has tumbled lower this week, with the price moving within close proximity of a critical support level. Meanwhile, the Brent bounce continues apace. 

Gold mining
Source: Bloomberg

Golds breaks trendline, yet key support remains

Gold has seen a sharp move lower this week, following a break below both the 76.4% retracement and trendline support. This brings about a significant risk that second half could be a bit of a shocker for gold prices.

For a wider bearish outlook to come into play, we would need to see a break below the critical $1214 level. That would form the first weekly lower low of 2017. For now, we have seen a little rebound, yet the downtrend remains intact. Considering the proximity to that crucial $1214 support level, it could be prudent to await a break below for further shorts to be considered. Until then, we could see some further gains as the market takes a breather.

Brent weakness would provide buying opportunity

Brent has continued to gain ground in a very consistent manner this week, where any pullbacks have been largely short-term in nature and conform well to the ascending channel.

We are seeing some consolidation at present, which is likely to resolve in another move higher. On this occasion, it seems unlikely that we will see a deep pullback, and, as such, any move back into trendline support, between the 50% and 61.8% ($49.01-49.15) would look like a good buying opportunity. A break below $48.56 would negate this view.

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.