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Gold could drop to $1220
The drop back from the 50-day moving average last week and a turn down in the daily relative strength index seems to suggest that gold is moving back to challenge $1220. A close below this level would then open the way to $1215 and then $1200, although the 20-DMA may provide support in the short term.
Moves upwards have been contained by $1235, while the descending 50-hour MA should also cap progress. Downside targets in the near term lie around $1227 and then $1222, while any move upwards still targets $1240.
Silver’s bearish scenario intact
Friday’s close below the 20-DMA still leaves the bearish scenario intact, while in addition the steady July downtrend reigns unchallenged.
Declines target $17.05 and then $16.75, while any moves higher for silver are still heading for $17.33 and then the aforesaid trendline at $17.37.
Brent meets resistance at $87
The test of $87 that we saw twice last week has confirmed this level as a notable hurdle for Brent, while the drop back below the 200-hour would mean that the $84 low from last week is back in play once more.
The intraday RSI is declining from its Thursday peak, along with the stochastic momentum index, suggesting more short-term downside is on the way.
Any move back above $86 still needs to clear $87 to be in with a chance of reaching the $88.44 area.
WTI could fall below $80
US light tried to clear the 200-hour MA last week but was knocked back, reigniting the downside scenario and suggesting we could see another attempt to break below the $80 support zone that has held throughout October so far.
A close back above $81.85 would provide some short-term relief for the longs, but would still stumble around $82.60 and then $85.