Gold and Brent break higher

Gold and Brent break higher, with the crude rally bringing both these commodities in line.

Gold rallies into resistance after Powell comments

Gold rebounded sharply yesterday after the chairman of the Federal Reserve (Fed), Jerome Powell, raised hopes amongst some that we could see a double rate cut of 50-basis points (bp) later this month. That remains the least likely scenario, yet markets have been preparing for this new bout of easing from the Fed by buying gold.

The breakout through $1375 was particularly notable, and we have remained above that level despite the payrolls fueled sell-off on Friday. With the price rising sharply, a break through $1439 would bring about a bullish breakout signal given the recent consolidation. However, for now we are trading back at the $1425 resistance level which has been respected on two occasions already. Watch for a potential retracement lower from here, with a break higher pointing towards a potential challenge of the crucial $1439 level.

Inventories drawdown sends Brent through crucial resistance level

Brent crude managed to surge into and through the $66.70 level yesterday after a substantial drawdown in US inventories.

That break brings about a more bullish wider picture for this market. Meanwhile, while further upside remains likely, the subsequent retracement would be seen as a buying opportunity rather than a beginning of a bearish trend. That remains true unless we see a decline through $62.04 support.

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