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Technical analysis: key levels for gold, silver and crude

The strength of the dollar is impacting the entire commodity suite and, while the moves in the dollar basket are bullish, this is likely to continue.

Silver bars
Source: Bloomberg

Gold could find support at 200-DMA

As we await the minutes of the most recent Federal Open Market Committee meeting, gold has retreated below the $1300/oz mark and is currently testing short-term support at $1293. The distinct lack of inflationary pressures, and the fact that quantitative easing is set to come to an end in October, is not helping to create a bid for gold presently.

Support at $1284 and the 200-day moving average may be the next move for the metal, with rising trendline support from the January lows at $1280 below that. Relative strength index is not oversold. Only a move through $1322 will allow the gold price to shake off the current phase and create an environment to allow a push towards the July highs at $1345.

Silver hopes to break above $19.80

The news is similar for silver which is testing the trendline resistance from the September 2013 highs, and is trading below all significant DMAs. A break through yesterday’s lows at $19.38 puts the price back towards $19.06. Resistance lies at $19.52, then $19.74, and while the RSI is looking oversold we may see some range-bound moves in the near-term.

The bearish channel from the July 10 highs indicates that only a break above $19.80 will allow silver to regain some poise.

Brent could push to $102.56

Yesterday’s doji candle on Brent presents the possibility of an upside correction. Given how far the price action has deviated from the 200-DMA, an upward spike towards the $102.56 level and even $103/bbl cannot be ruled out. The rising divergent RSI is also helping to make this scenario play out. This is only a possibility as long as $102/bbl holds firm.

A break through yesterday’s highs would see a move towards $102.65, while a break through the $103/bbl level would alleviate some of the recent downside pressures. Crude oil inventories are released at 3pm today (London time)  – the forecast is for a decline of 1.3million barrels. 

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