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Technical analysis: key levels for gold, silver and crude

The outlook for commodities does not look encouraging, with the sector out of favour thanks to a stronger US dollar.

An oil pipeline
Source: Bloomberg

Gold making lower highs

It would be natural to assume that the recent volatility would have finally given a lift to the gold price, but this has not been the case. Instead, we see gold still making a series of lower highs over the past week, with only today marking a possible turnaround.

The previous two sessions saw gold bounce from the $1280 level, so this is taken to be the key support for the time being. The 50-daily moving average is also acting as resistance, leaving the emphasis to the downside for the time being.

On an hourly chart the recent rally has run out of steam, close to the 100-DMA. Coupled with a declining intraday relative strength index another test of $1280 cannot be ruled out, particularly if a degree of optimism returns to equity markets after the storms of last week.

Silver supported by $20.30

A similar downtrend prevails in silver, even as the 50-DMA crosses above the 200-DMA for the first time since September 2012. A declining 20-DMA, falling daily RSI and bearish moving average convergence/divergence all point to more downside for silver.

The $20.30 level has held as support in recent days, with the 200-DMA just beyond it. However, a turnaround will need to be reinforced with upward moves in the RSI, and ideally a recovery above the 20-DMA as well to suggest any recovery of ground in the direction of $21.50.

A steadily-falling 200-hour moving average also puts more emphasis onto the bearish scenario, with minor support around $19.90 a possibility.

Brent's dive halted

A dive towards the April low of $104 appears to have been halted for now, but the drop through key support $107 certainly sends a message that Brent is not in a mood to rally.

The $104 level is the first line of support to watch for, with the November low just under $103 coming into play if the higher level is breached. Any break to the upside would need to recover $107, but with the $108 level and the 200-DMA just above it the omens are not particularly positive.

NYMEX support holding at $97.40

With this market at its lowest levels since early February the momentum is firmly to the downside, but an oversold reading on the daily RSI does suggest there may be some buying in the short term.

NYMEX is seeing a serious dip below the long-term weekly trendline, although it should be noted that these have occurred before. Support does seem to be holding at $97.40, but if this level is breached the next potential area becomes $95.60-$95.70, last seen in late January.

Only a break back above the 200-DMA and the all-important $100 mark would signal the start of a recovery.

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