Gold, Brent price taking a breather while aluminium bounces off support

Gold forms Gravestone Doji in light volume trading

Last week fears of soaring inflation led to the price of gold breaking through its key $1,959 to $1,974 resistance area, which consists of the September and November 2020, January 2021, and February 2022 highs.

Yesterday traders tried to push the precious metal to the psychological $2,000 mark in low volume trading due to the extended Easter weekend, but gold stalled just short of that level before coming off again, forming what is called a Gravestone Doji on the daily candlestick chart.

This pattern can act as a topping formation if the next day’s, i.e. today’s, candle closes below yesterday’s low at $1,977. In this case a slip back to the previous resistance zone, now because of inverse polarity, support zone, at $1,974 to $1,959 should be on the cards.

Were yesterday’s high at $1,998 to be exceeded, however, the 10 March high at $2,009 would be eyed. Then there is no resistance to speak of until the March peak at $2,070.

Brent crude oil’s rally is taking a breather

Last week’s sharp advance in the price of Brent crude oil by nearly 15% is taking a breather as demand from China has temporarily waned due to its restrictive Covid-19 policy.

The rally from around the 11 April’s low at $97.42 took the price of Brent to $114.00 yesterday on the back of ongoing tight supply as minimal output increases from OPEC+ meets sanctions on Russian crude exports.

There were also fears that the supply issue could worsen, should the EU move in favour of banning energy imports from Russia, pushing the oil price higher still.

The 5 April high at $109.55 is likely to be revisited today, below which the breached March-to-April downtrend line, now support line, at $105.00 and the 55-day simple moving average (SMA) at $103.07 represent possible downside targets.

If yesterday’s high at $114.00 were to be bettered, though, the 30 March high at $112.20 would be targeted. Further up the 3, 10 and 24 March highs at $116.48 to $120.48 form another resistance zone.

Aluminium’s bounce off support encounters resistance

A week ago, aluminium held at its mid-March’s $3,223 per tonne low despite Covid-19 lockdowns in China provoking slowing demand for the industrial metal.

Prices of the metal used in transport, construction and packaging have fallen by over 12% from their $3,733 24 March high but then bounced off key support at $3,223 and today flirt with the two-month downtrend line at $3,322, having earlier been capped by the 55-day SMA at $3,363.

Further, minor resistance can be seen 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 recent downtrend is still in force with a fall through last week’s low at $3,222 leading to the January high and February 11 low at $3,109 to $3,057 being targeted.

Further down the February low can be found at $2,964.