Gold falls further, while Brent crude and lumber start to regain lost ground
Gold continues to move lower, while Brent crude and lumber start to regain lost ground to raise the potential for a bullish reversal.
Gold continues its downward trajectory
Gold has remained under pressure this week, with price falling back towards the September low of $1615.
Gold has been having a hard time of it during this crisis, with price action for the precious metal taking a very different course to that seen during other major market sell-offs. The fact that this crisis is driven by a need to combat inflation means that interest rates are raised rather than lowered, bringing greater attraction to the US dollar.
While the completion of this tightening stage could benefit gold, there will also be questions over just how swiftly inflation will drop or whether it will remain entrenched and require higher rates for longer.
With UK inflation reaching double digits this week, we are looking unlikely to turn that course quite yet. As such, further downside looks likely here, with a break below the $1615 level signalling the beginning of another extension lower.
To the upside, a rise through $1735 would be required to bring about a bullish reversal for gold.
Brent crude starts to strengthen as Biden warns of further SPR releases
Brent crude has started to regain ground since Tuesday's decline into the 61.8% Fibonacci support level.
Recent comments from US president, Joe Biden signal his willingness to release further crude from the Strategic Petroleum Reserves, but that instead serves to highlight the fact that this huge supply has been drained heavily under his leadership with a view to artificially keep energy prices low.
Thus, there is a chance that price reverses higher once those sales stop and the US have to start refilling the reserves once again. For now that is not the case, but with OPEC cutting production, and US SPR sales drying up there is good chance that things start turning upwards before too long.
The recent rise through $95.19 brought about a wider 76.4% Fibonacci retracement, but the subsequent sell-off could come under pressure if price moves up through $94.29 resistance. Such a break would signal the potential for a near-term rebound, with the bears remaining in charge until such an upside break occurs.
Lumber rises through trendline resistance but bearish trend continues
Lumber has managed to break back up through both the $460 resistance level and descending trendline this week, with price building on a recovery phase that has dominated October thus far.
From a seasonality perspective, the final three months of the year often provide a dramatic resurgence for lumber. Thus, it is worthwhile noting the potential for a resurgence from here, with a push through $578 required to signal the end of this current bearish trend.
Until we see price break through resistance, there is still a chance that we see this ongoing downtrend continue once again.
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