Technical analysis: key levels for gold, silver, crude

Gold enjoyed a rapid surge yesterday that has carried it through recent resistance, with silver following in its wake. NYMEX is enjoying new gains too, after closing the session near the highs of the day.

Gold bars
Source: Bloomberg

Gold breaks £1320

Gold performed a rapid turnaround yesterday and broke $1320, signaling the start of a breakout higher. The level to watch now is $1326, the high from April.

Gold bugs will be uncomfortably aware that the last test of this level saw a rapid drop to $1280. Any fall back at the moment may be halted by the $1310 level, the low from Monday.

A break of $1326 would signal a move to $1330 and then $1340, with a possible eventual target of the March high, around $1386.

Silver eyes March highs

The white metal is enjoying a breakout along with gold, and while temporarily stalled around $21.16, it is looking like a run to the March highs around $21.51 may be in order.

Silver is sharply oversold on a daily chart but a glance at the hourly shows this trend has been well-supported, with the 50-, 100- and 200-hour averages all pointing higher.

Any drop lower should be capped by the $20.77 level, the lows from last week.

Brent crude sees support at $112

Brent tested $112 during Monday, but it seems like support is gathering round here. However, there is as yet no clear sign that the bulls have the upper hand.

A drop back towards $111 may bring out more buyers, who are waiting for further weakness. Any upside would need to break $115, the June high, for a sign of a longer-term trend.

$105 holds well for US light crude

A close near the highs of the day is a strong sign here, as the $105 level has held well. The strength in evidence around $105 is a pointer to further gains in the direction of $107.50.

The trend in NYMEX remains resolutely upwards, but as before pullbacks will occur. These are still likely to be a ‘buy on weakness’ moment, however.

For the downside, we would need to see a drop through $105 and then a move towards the 50-day moving average around $104. Even then, the 100-day moving average has done an excellent job in providing entry points for longs, as seen in March and April.

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