Walter Zimmermann of United-ICAP says that if Brent Crude makes a decisive close below 91, the next target area is 75.80. This, he says, would have nothing to do with crude fundamentals and everything to do with a rising US Dollar.
Commodities & Energy
Gold is approaching crucial support along the bottom of a descending triangle pattern, according to Peter Lee, Chief Technical Strategist at UBS in New York. Violation of this support will open the door to the July 2010 low.
The relationship between USD/JPY and gold is one of the most interesting intermarket stories around, according to George Davis, Chief FIC Technical Analyst at RBC Capital Markets. He points out that this correlation is now at its most negative since 2008.
Further weakness is expected for Brent Crude and Gold, according to BNP Paribas Personal Investors. The next support for Brent is at around 88.5, whereas “below 1290, Gold remains in a bearish stance on all time-frames.”
Despite strong resistance at 1228/29 gold has touched 1235 before reversing again and now needs to hold 1220/19 in the short-term to avoid a continuing decline says Jason Sen at DayTradeSignals. Should this break the metal should target 1215/4 and below this 1212 and 1208.
Long-term currency cycles is lending strength to the US dollar which in turn is pushing prices of Brent crude oil. The dollar’s 8 year cycle is due to top in 2016 and, as such, further declines in the oil price are to be expected. The longer-term target stands at 70.698.
Although the short-and medium term outlooks remains neutral for gold, a test of 1260.4 on the monthly chart looks increasingly likely, says Clive Lambert at FuturesTechs. Should this happen, 1179.4 would be the target. On the upside, 1300-1302.4 needs to be broken for further gains.
The Bloomberg Industrial Metals Index has lagged the BBG Commodity TR Index since 2010 but has now broken out from its relative strength trend, says Riccardo Ronco at Aviate Global. Added to a break of its 50 & 200 day MA’s, this will be a significant bullish signal if July’s highs are breached.
A triangle breakout will bring a downward move to $1100 for gold before a countertrend rally is seen, says Tarun Dang at Trendwise. A decline will also form a 5th wave of an Elliott Wave pattern thereby reinforcing the conviction of a possible downward break.
The long-term downtrend in the Gold Miners ETF price ended this year but a genuine reversal in price has yet to be confirmed, says Andy Dodd at Louis Capital Markets. A breaking of the neckline of a head-and-shoulders reversal is required first. After this 35.00 is the target.