Gold and Brent crude prices consolidate, as we await the next big move

Gold and Brent crude largely consolidate, yet further divergence is expected as gold await another leg higher.

​Gold continues to consolidate despite wider market rebound

Gold volatility has completely collapsed, with the sharp gains seen in the early part of last week turning into a consolidation phase. Given the upside we are seeing in global stocks, the lack of any major downside in gold is encouraging.

With stocks expected to turn lower before long, this current pullback in gold looks like a buying opportunity given the potential upside that could come if stocks do start to reverse. As such, long positions are favoured within the 61.8%-76.4% zone ($1614-$1607), with this bullish outlook holding unless we see a break below the $1596 swing low.

Brent rallies into trendline resistance

Brent has managed to gain ground, with a discussion between US President Donald Trump and Russia President Vladimir Putin leading to plans for a meeting between the energy ministers from their respective countries. However, until something changes, the huge oversupply in oil remains a driver of bearish market sentiment.

The rally we have seen overnight has taken us into trendline resistance, with a break above this level required to bring about a rally into the wider Fibonacci resistance zone of $28.43-$29.17. Until that happens, there is a strong chance of further downside from here. Ultimately, we will need to see the $30.38 level broken to bring about a more consistent bullish picture for the price of Brent. ​

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