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Levels to watch: gold, silver and crude

An unexpected calm has descended on the commodities complex, with small movements and little change to the overall picture.

A man walking by oil barrels
Source: Bloomberg

Gold direction still down

A steady see-saw in gold has provided short-term trends but the overall direction is still down. The metal spent yesterday working off the Friday oversold condition, with buyers stepping in to hold the price above $1150.

We have seen it clamber above resistance at $1154, with a rising intraday relative strength index providing some hope that the metal will see another test of the declining 200-hour MA. A break through here would target the Friday high around $1180, while a drop below $1154 points the way to a potential test of the 7 November lows at $1132.

Silver remains oversold

Silver is holding above the 100-hour MA for a second consecutive day, a not inconsiderable achievement given the hefty bearish sentiment in this commodity. A first target is the high seen early yesterday, around $15.90, which would also take the commodity back to the 200-hour MA.

With the metal still oversold we could see further gains back towards $16.50, but ultimately I expect to see further declines towards the end of the year. A first target on the downside is $15.07.

Brent could fall to $82

The $82.40 level appears to be holding on the downside for Brent, and with the daily RSI edging higher we may see some buying that will carry us back to $85 and thence to $87.30.

Any further declines from this point would challenge the $82 zone and then the 5 November low at $81.60.

WTI emphasis could shift to downside

US light is barely in positive territory today, and with a potential bearish crossover of the 50- and 100-hour MAs developing the emphasis seems to be shifting to the downside. Yesterday’s precipitate drop in WTI took us through the short-term uptrend that had underpinned the move from 5 November, and while the commodity is no longer oversold any rallies should be contained around $78.20, at the confluence of the 50- and 100-hour moving averages.

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