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Levels to watch: gold, silver and crude

There has been little change to the ‘strong dollar, weak commodities’ scenario, although oil has managed to eke out some small gains this morning. For precious metals, the pain continues.

Oil pipes
Source: Bloomberg

The US dollar and Treasury yields have risen this week on changed expectations regarding US monetary policy. If the Federal Open Market Committee meeting next week does take a more hawkish turn then commodities could see further falls. However, given the magnitude of the move seen in recent weeks it is entirely possible a short-term bounce may be in the offing.

Gold breaks below $1240

With the yellow metal breaking below the $1240 level for the first time since June, a close below this level targets $1225 and then towards $1198.

An oversold reading on the daily relative strength index could see a bounce, but the $1244 level should see some resistance, with a close above here looking towards $1253.

Silver decisively oversold

Silver remains firmly oversold today, testing levels not seen since June of last year. A close around $18.50 would then open the way to $17.95.

Any bounce must retake $19, but the 20-day moving average at $19.25 is also likely to provide resistance, as has been the case throughout the current downtrend from $21.50.

Brent supported by $98.80

If Brent doesn’t rally much from its current level then we will be looking at its lowest weekly close since July 2012. So far $98.80 is holding as support, and a close below this would target the 11 September low around $97.50.

WTI testing 20-DMA

The $91.90 level is firm support for the time being here, but once again the price is testing the 20-DMA. Previous attempts to clear this level have not been wildly successful, so the downside scenario still seems to prevail. A break through the moving average would point WTI towards $95.15. 

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