Gold and Brent crude prices regain ground overnight

Gold and Brent crude regain ground overnight, yet will it be enough to lift sentiment after yesterday’s declines?

Gold manages to break higher from recent consolidation

Gold has been tightening within a symmetrical triangle formation over the past 24 hours, with the price rising through trendline and $1724 resistance. That move has been relatively fleeting, yet it does point towards a likely continuation of the wider bullish trend. A persistent move through $1724 would solidify that bullish expectation for the day.

However, it is worthwhile noting that yesterday's declines occurred alongside a bearish move for indices. As such, we find ourselves in a curious situation where gold traders are more confident being bullish when stocks are on the rise. Should gold decline as stocks turn south, a break below the $1709 level would point towards a period of downside for gold.

Brent crude finds support at 61.8% Fibonacci support

Brent declines took us into the 61.8% Fibonacci support level yesterday, with the overnight session bringing some respite to those sharp losses. Unfortunately, we are back on a bearish pathway this morning, with the $29.00 lows back in view.

A break back below yesterday's low would signal a continuation of this current period of weakness, yet it is justified to expect some form of stability above the previous low of $24.75 given that we have seen a significant chunk of global production taken off the market since those lows. As such, the big question is whether we are going to resect these Fibonacci levels at $29.39 and $27.62, or else resume the wider downtrend. Should we hold up at Fibonacci support, it could be a sign that the dynamic is starting to shift somewhat as a gradual reopening of some countries helps lift sentiment. Otherwise, if we break below Fibonacci support, it could point towards further losses in anticipation of a long hard road of oversupply.

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