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Technical analysis: key levels for gold, silver and crude

The spike commodity prices witnessed yesterday has staged a retreat in early trade today. Geopolitical risk remains the key driver here.

Oil barrels
Source: Bloomberg

Gold has potential for further upwards move

The fact that the volatility index rose 30% in a single day ensured that gold prices caught a bid yesterday afternoon. Prices have now retreated from the $1324/oz, yet while above the $1300 level there is a propensity to move higher.

The 50-day moving average, along with the previous trendline resistance from the October 2012 highs, is providing a base for gold – any daily close below $1292/oz could erase the current bounce.

Moreover it is worth checking the 200-period MA on the four-hour chart as it has proved a useful metric in recent days with respect to areas of support and resistance.

A move through $1325 is necessary if gold is to make any real attack on the real overhead resistance at $1345.

Silver in tight range

On the weekly chart the trendline resistance from the September 2011 highs is still very much intact for silver, and realistically only a move through $23/oz would change this.

Shorter-term, the break of trendline resistance from the August 2013 highs has left the price in a rather tight range, with $21.60 at the cap and $20.50 the support. Yesterday’s spike higher failed to move through the resistance level, so even while current price action is being supported by the 50- and 100-hour moving averages, this range is likely to hold.

Intraday we would look for a move through $21.24 if we were to target the top of the range. While on the downside, a decline through $20.80 would put us back towards the bottom of the current trading zone.

Brent sees bounce

Since topping out at $115.60/bbl in late June, the decline in Brent prices has been dramatic, so the escalation of geopolitical risk coupled with the oversold signal on the daily relative strength index has ensured the current bounce higher.

The 200-day moving average at $108.86 is the barrier to any upside from here but could well be a target in the near-term. The $108 dollar mark is the 23.6% upside retracement of the entire move down and, given that this coincides with the 50-period MA on the H4 chart, should act as a base for prices in the near-term.

Any moves back through this level target $107.55.

Previous NYMEX support becomes cap

The $103.28/bbl has capped the pullback in oil prices for now. Previous support lent by the six-month trendline now turns to resistance, and the coincidence of the 50-day moving average at $103.80 could well act as a magnet for additional upside should this level be breached.

As it stands the 100-DMA at $102.35 is providing an area for bids so we will need to watch for any break outside the range to decide on the overall direction. A move down targets $101.50 in the short term.

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