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Commodities finally breakout of range on weak USD


Gold prices finally came to life last week, breaking out of the range and surging higher. The dollar index (.DXY) fell to its lowest in more than a year, making Gold cheaper worldwide, pushing Gold prices to one-month highs.

Lower-than-expected US inflation data has lowered expectations of further interest rate rises, which is positive for a non-yielding asset like Gold. Once Gold moved above $1,936, strong buying entered as long-term traders target a return to $2,000.

Now Gold has moved above resistance, and the 10-day moving average is pointing higher the medium-term outlook is very positive. In the short-term, the market is overbought, and there are few important economic releases this week apart from US Retail sales, so look for a test lower at the start of the week.

NY Gold chart Jul 16

Resistance: 1984, 2000, 2032, 2050, 2080

Support: 1938, 1900, 1889, 1870, 1830


For the third week in a row, WTI recorded a weekly gain, finally moving above $75 resistance. Supply disruptions in Libya and Nigeria and lower Russian crude exports strengthened the fundamental outlook pushing prices higher. The weaker US dollar also contributed to the bullish sentiment last week.

Profit-taking pushed prices lower on Friday, but the medium-term outlook is now favorable for WTI, with the technical indicators now pointing higher. The week ahead could be quieter, though, as the market looks to consolidate the recent gains. Expect a push lower back below $75 in the short-term, but $72.50 support is now strong, and the 10-day moving average should also provide support.

WTI chart Jul 16

Resistance: 79.00, 82.50

Support: 75.00, 70.00, 67.00, 65.00, 64.00, 62.00