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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Gold, WTI and aluminium prices drop on demand concerns

The outlook on gold, crude oil and aluminium is short-term bearish, caused by lower demand due to China’s restrictive Covid-19 policy.

Gold price heading back down towards two-month uptrend line

The gold price has swiftly come off this week’s $1,998 high, made close to the psychological $2,000 mark in low volume trading on Monday due to the Easter weekend, as demand worries related to extended lockdowns in China and the ongoing global cost of living crisis outweighed concerns about soaring inflation.

The two-month uptrend line at $1,930 is thus in focus, together with the 55-day simple moving average (SMA) at $1,920.

Minor resistance can now be spotted at the 14 April low at $1,961 and more important resistance at the late March high at $1,966.

Only if this week’s high at $1,998 were to unexpectedly be exceeded, would the 10 March high at $2,009 be back in focus. Then there is no resistance to speak of until the March peak at $2,070.

WTI forms minor top at $109.19

Monday’s Doji daily candlestick formation, which denotes indecision in the market, has been followed by a rapid sell-off in the price of crude oil due to demand concerns caused by China’s restrictive Covid-19 policy.

The breached previous one-month resistance line acted as a support line yesterday and today may offer support again with the 55-day SMA at $100.65 to $100.14. If not, we would have to allow for the December-to-April uptrend line at $94.75 to be back in play.

Minor resistance above the 5 April high at $104.80 comes in at Monday’s $105.45 low. Only a currently unexpected rise above this week’s $109.19 high would lead to the late March high at $116.31 being back in the picture.

Unless this scenario plays out, a series of lower highs and lows, the definition of a down trend, continues to be seen.

Aluminium weighs on key support

Aluminium once more weighs on its mid-March and last week’s $3,223 to $3,222 per tonne lows as Covid-19 lockdowns in China provoke slowing demand for the industrial metal.

Prices of the metal used in car manufacturing, construction and packaging have fallen by over 12% from their $3,733 24 March high and should be heading down towards the January high and February 11 low at $3,109 to $3,057 once the $3,222 low has been slipped through. Further down sits the February low at $2,964.

Immediate downside pressure should be maintained while the price of aluminium stays below yesterday’s high and the 55-day SMA at $3,354 to $3,365.

Further, minor resistance can be spotted at the 29 March low at $3,404 and also at the next higher April high at $3,514. While the aluminium price remains below the latter, the medium-term downtrend remains intact.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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