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Levels to watch: gold, silver and crude

Sentiment in equity indices is distinctly weak this morning but precious metals are enjoying gains for a second day in succession. However there is little change in oil’s steady retreat, with both Brent and WTI giving back ground gained yesterday.

Oil barrels in a warehouse
Source: Bloomberg

Gold could retest 50-H MA

The $1209 level is proving a major headache for gold so far this morning, but even a break through here would see further difficulties around $1220. The daily relative strength index has steadily risen from its lows last week, but for the time being the move is still a bounce from oversold territory rather than the beginnings of a sustained move higher.

The hourly chart shows how the price has so far failed to breach the 200-hour moving average, and if this drop lower continues then we may be about to see a retest of the 50-hour MA at $1199, assuming the 100-hour MA is broken.

Silver RSI moves out of oversold zone

Although back above $17, silver has seen sellers step in and firmly defend the $17.50 zone. The worry for silver bulls now will be that the move out of the oversold zone on the daily RSI will be taken as an excuse for further selling. Certainly the 20-day moving average at $17.86 looks like a bridge too far at present.

At least the price has broken through the 200-hour MA for the first time since 28 August. However this is not a particularly cheering example, since that day saw a rapid slump lower. Now the 200-hour MA becomes possible support around $17.29, with any close above $17.50 setting up a move to $18.

Brent still struggling

For the moment, the area around $92 is providing support to the price, with the $88.40 zone the next big area. Brent is still heavily oversold on the daily RSI, but a bounceback is still not being seen. The hourly chart shows that $93 was the limit of Brent’s gains yesterday, and even if this is broken the 100-hour MA at $93.27 is still going to be a hurdle.

WTI eyes $92

WTI buyers have for the moment stepped in above the $88 mark, but a lacklustre daily RSI still seems to point to additional downside. It will be interesting to see whether the price can move back in the direction of the 20-DMA, currently around $92 but even if this is broken the 50-DMA and the $94.50 area is likely to provide resistance. A close below $89.50 still targets the October low of $88.15.

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