Gold, Brent crude, and lumber prices head lower as dollar strength dents sentiment

​Gold on the back foot this morning

Gold has seen a fresh bout of selling over the course of this morning, with the precious metal weakening in the wake of yesterday’s US consumer price index (CPI) reading.

While gold initially rose in the wake of the 9.1% inflation reading, we have seen US dollar strength once again come to dominate here. With that in mind, further short-term weakness looks likely to drive price back down towards the critical $1676 support level.

From a wider perspective, that $1676 threshold is going to be key in determining how long this sell-off lasts. Until then, it is a case of watching for the continued creation of lower highs to confirm that this short-term downtrend continues.

As such, a push back up through the recent $1752 level would be required to signal a potential upwards move towards the 200-day simple moving average (SMA).

Brent falls back into key support

Brent crude has been hit hard of late, with price falling into the lowest level in almost four months yesterday.

The trend seen over the course of the past month is one of lower highs and lower lows, signalling the expectation that we see further downside to come.

With the $97.41-95.59 support zone currently being challenged, the ability to pass through those levels will be key in continuing this trend.

To the upside, it is worthwhile noting that each previous retracement was roughly 50-61.8% in size, highlighting the potential for a move towards $102 if we do see another retracement from here.

However, any such upside move would be deemed a precursor to further weakness unless we see price break up through the $106.25 swing-high to bring about a more bullish outlook.

Lumber looking more constructive as bullish pattern takes shape

Lumber has been showing signs of a resurgence of late, with price attempting to recover after a three-month decline from March to June.

What is evident over the course of the past two years is that lumber has provided us with great trending periods to trade within. On the four-hour chart, we can see how price has broken up through the $714.10 level to bring a more positive view.

Thus far, this week has brought downside for lumber as it pulls back from the 200-SMA indicator. However, that looks like a retracement, with price respecting the 61.8% Fibonacci level thus far.

With the stochastic falling back towards oversold territory, it looks likely that we will see the bulls come back into play soon enough. As such, bullish positions are favoured for lumber, with a decline through the $609.68 level required to negate that view.