Gold prices move higher, but oil remains under pressure

​Gold edges higher

Gold prices have lifted off from the support zone that has held since the first half of March.

The week ahead sees the release of US consumer price inflation (CPI), following hard on the publication of Chinese price data this morning. In addition, we have meetings of the European Central Bank (ECB) and the Bank of Canada (BoC), and inflation concerns should feature heavily in both of these events.

Gold has spent the past month hovering above $1910, but aside from an attempted break higher in March the price has been unable to make headway. Now it is once again pushing back towards $1958, where it stalled three weeks ago. If the gains continue above this level, reviving the uptrend, then the $1992 and $2015 level comes into play.

For now the bearish view is in abeyance, and it would need a move back towards $1910 to reverse the growing bullish view, one which is strengthened by rising stochastics and by a potential bullish moving average convergence/divergence (MACD) crossover as well.

The big hurdle for sellers will be that the support zone around $1910, and which stretches down towards $1890, is going to need to be definitively broken to the downside in order to open the way to $1860.

WTI reverses Friday’s gains

Friday’s brief recovery has been reversed, with the price dropping back sharply in early trading. However, a support zone around $94.10 appears to be forming, as it did in mid-March.

The surge in prices seen in late February and early March has subsided, and perhaps a key driver in this has been the diminished expectations around economic growth. This has been driven by higher inflation and its deleterious effect on consumer spending, along with the tightening of policy by central banks.

So long as support holds around $94.10, then the overall uptrend remains intact, potentially setting up a bounce towards $115, although it will need to break trendline resistance from the late March peak.

Sellers need to push the price below $92.45, in order to open the way to downside towards $83.80. For the time being, however, the buyers are able to hold support, which continues to provide the possibility of a move back in the direction of recent highs.