Brent crude oil slides, sugar stalls and gold stabilises
Outlook on Brent crude oil, gold and sugar as US dollar recovers.
Brent crude oil partially closes its March-to-April gap
Brent crude oil’s descent from last week’s 2 ½ month $87.19 high, weighed down by global economic growth and future energy demand fears, is ongoing despite solid data out of top oil importer China earlier this week showing that its economy grew by more than expected in the first quarter.
The Brent crude oil price so far slipped by over 5% from its current April peak, back to the breached November-to-March downtrend line which, because of inverse polarity, now acts as a support line, together with the 55-day simple moving average (SMA) at $81.90 to $81.80.
The March-to-April gap goes all the way down to $79.92 and may still get filled.
Immediate resistance can be seen along the first week of April lows between $83.45 to $83.58. While it caps on a daily chart closing basis, downside pressure should retain the upper hand.
Gold oscillates around the $2,000 mark
Gold formed a minor top at its one-year $2,048 per troy ounce mid-April high as the US dollar bounced off its one-year low and on Wednesday dipped but did not close on a daily chart closing basis below its $1,982 10 April low.
Nonetheless the precious metal price did slide to $1,970, a daily chart close below which would confirm that at least an interim top has been formed, in which case the February high at $1,959 ahead of the $1,950 to $1,935 support zone, the late March and early April lows, would be eyed.
Resistance can still be found between the $2,003 to $2,009 late March highs ahead of the 5 April high at $2,032.
Sugar hits new eleven-year high
The steep ascent in the price of sugar (no. 11 front month futures), mainly caused by production bottlenecks in key producer nations and countries like India limiting their exports leading to strong global demand not being met, has on Wednesday briefly taken it to an 11-year high at $24.35 for 112 000 pounds of raw cane sugar.
Since the $24.35 Wednesday high was made marginally above last week’s $24.29 high and the Relative Strength Index (RSI) did not confirm the higher high, negative divergence can be spotted on the daily chart. It more often than not leads to at least a short-term consolidation phase and sometimes to a significant reversal.
We thus expect to see a slide back towards the $23.25 low from last Friday take shape, provided that no daily chart close above the $24.35 high unfolds. Failure at $23.25 would confirm a top and could lead to a slide back towards the $22 region ensuing.
Around the recent highs the $24.00 July 2012 high and September 2016 peak at $24.09 were made, making the $24 region a potential significant resistance area.
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