Gold price rebounds while Brent crude price falls after API release
Gold starts to turn higher from Fibonacci support, as Brent crude heads lower off the back of a big API inventories build.
Gold rallies from Fibonacci support
Gold has started to move higher following a decline into the 76.4% Fibonacci support level at $1693. The confluence between that Fibonacci support level and the 11 May low of $1692 provides us with a very important level of note, which has currently provided a basis for the price of gold potentially bottoming out.
The use of the standard deviation channel points towards a resistance level of note up ahead. As such, while we could bottom following the decline into the 76.4% Fibonacci support level, a break through channel and $1735 resistance would provide greater confidence that we are on our way back towards the $1765 highs.
Brent crude threatens to reverse from recent uptrend
Brent has started to turn south following a surprise build in American Petroleum Institute (API) crude inventories yesterday. That highlights the ongoing oversupply despite recent cuts to production around the world.
For Brent, the subsequent decline is taking us back towards the key $33.85 support level. A break below the point would bring about a double top formation. However, there is a good chance we will continue this recent consolidation, with a rise from here. Watch for a break through the 20 threshold on the stochastic to build greater confidence that momentum is reversing higher. Until then, the outlook will be determine by whether we break $33.85 support or not. Keep an eye out for the US Energy Information Administration (EIA) crude inventories number as a driver of sentiment going forward.
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