Technical analysis: key levels for gold and crude

The attritional battle between bulls and bears in gold goes on, while oil retreats in line with equities. 

Mining
Source: Bloomberg

Gold in the balance

Depending on your view, gold is either about to surge, or it is going to break down. The somnolent range of the past five sessions is the clearest sign of the battle going on between the buyers and sellers. So far, the 200-day simple moving average (SMA), currently $1263, continues to hold back gains, but dips to $1250 keep being bought.

The relative strength index (RSI) continues to clamber upwards, but for now, the range remains intact. Both sides must be aware that a break of the range will probably result in high volatility, with a drop to $1200 possible if the sellers gain control, while a rally to $1300 cannot be ruled out should the bulls take the lead.

Gold chart

WTI puts bears in charge

The failure to break $52 has emboldened the sellers, with oil now heading back to the lows of last Friday. A break below $49.53 could spark a rapid drop towards the 50-day SMA at $46.97, and would put the commodity on a rapid downward trend.

As with equities, the broader uptrend from the beginning of the year remains intact, so as long as the $45 area holds we could still see a revival later in the year. 

WTI chart

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