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Levels to watch: gold, silver and crude

US dollar strength and year-end profit taking leave commodity markets mixed.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
Silver bars
Source: Bloomberg

Strong US dollar start continues to scupper gold prices

A strong opening to the week from the US dollar has seen gold prices reverse through a key level of $1,215, which previously acted as medium-term support. However, should a close be seen below said level then the next clear area of downside resistance will be seen at around $1,207.

Later on Monday we see the release of US industrial production data, which is expected to rebound to 0.7% from its previous level of -0.2% month-on-month, which if achieved will likely lead to further weakness in gold prices.

Silver breaks out of consolidation

Silver prices have broken to the downside through a week-long consolidation pattern taking out the $16.91 level. This is now likely to become support to further downside re-testing the lower immediate risk range, which currently resides at $16.74.

Brent targets a reversal

Brent prices have rallied off its December 14 low of $60.61 to its current level of $63.12, but before any talk of a reversal can begin it will need to see a close above a topside immediate risk range of $63.53.

However, it’s more than likely a result of short-covering heading into the year-end with traders favouring to take profits off the table following such an overwhelming move lower from its June high of $115.70.

Profit-taking drives WTI rally

WTI prices have also seen a short-term rally, but to a lesser degree than Brent, currently trading at $58.47 up from its short-term low of $59.89. Again, similarly to Brent, profit-taking is likely to be the driver of this short-term rally and with the topside resistance at $59.89 there’s still a way to go before a longer-term reversal pattern can be called.

Should markets fail to breach the $59.89 level then a resumption of the previous bearish trend could re-emerge with the downside target of $53.96 being the next clear area of resistance. 

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.