Gold, oil and copper prices stabilise ahead of US unemployment data
The short-term outlook on gold, oil and copper is cautiously bullish after a week of sharp declines.
Gold expected to find support around the $1,722 September 2021 low
On Tuesday gold dropped out of its last couple of months’ trading range by slipping through the May and early July lows at $1,787 to $1,785 to a 10-month low made close to the September 2021 low at $1,722 around which it is expected to find support, at least in the short-term.
In line with several other commodities gold is now trading below the pre-Russian invasion of Ukraine levels as the US dollar continues to surge to multi-decade highs on safe-haven flows.
A drop and daily chart close below the $1,722 low would engage the August 2021 low at $1,684.
Minor resistance can now be found at the $1,754 December 2021 trough.
WTI finds interim support
West Texas Intermediate (WTI) crude oil’s sharp drop from Tuesday’s $109.65 high took it close to its $92.92 to $92.45 support area from which it continues to bounce.
It consists of the 200-day simple moving average (SMA), March and April lows.
Despite its bounce, oil is set for a weekly loss on growth concerns and that a global recession is expected to hurt energy demand. Since previous support creates resistance, due to inverse polarity, this can now be found between the June low and breached uptrend line at $101.22 to $103.15 as well as at the $103.39 1 July low.
A fall through and daily chart close below the $92.45 March low would mean that the price of WTI has left its March-to-July wide trading range and would probably push it lower towards the October 2021 high at $85.06.
High grade copper declines for fifth straight week
Heightened fears of a global recession and Covid-related uncertainties in top consumer China have led to the fifth straight week of losses in the price of copper which is seen by many as a gauge for the state of the economy.
Having said that, a swift recovery rally occurred on Thursday following reports that China would boost its infrastructure funding to support its economic recovery following the pandemic slump.
The copper front month futures contract has thus recovered off this week’s low at $3.2755 per pound and is currently testing its upper downtrend channel resistance line which is expected to soon be breached since a bullish Doji Hammer formation has been formed on Wednesday’s daily candlestick chart.
Provided that this week’s low at $3.2755 holds, the late June high at $3.8494 will be in focus. However, to get there, the 24 June low at $3.6414 will need to be exceeded. In the short-term it may act as minor resistance.
With regards to the bigger technical picture, if a drop and daily chart close below this week’s low were to be seen, the April 2019 high at $2.9971 would be targeted.
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