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Levels to watch: gold, silver and crude

With the dollar basket pushing higher and threatening to approach the 89.00 metric last seen in June 2010, commodities remain under pressure. 

Oil poured into a barrel
Source: Bloomberg

Having failed to impress last month, falling 0.3% in September, US retail sales due out later this afternoon are expected to show a minor increase on the month with the consensus for a 0.2% print.

Anything higher than this could well serve as a catalyst for another leg up in the dollar at the expense of base and precious metals.

Ironically, the falling oil prices should now boost consumer confidence, so the fact that markets are expecting the University of Michigan consumer sentiment to rise to 87.3 from last month’s 86.9 should also bode well for both US indices and the greenback.

Gold supported by $1150

Gold continues to falter and seems unable to make any inroads through $1170/oz, but is finding support for now around the $1150 levels. The confluence of the hourly moving averages and the fact that price action is trading below it puts the bias on the downside for the time being.

Gold prices have breached the lower band of the bearish channel on the daily chart, in place since the March 2014 highs which were just shy of the $1400 marker, and this is capping any potential swing trades. Only a move through $1180 would provide an upside medium-term opportunity.

Intraday, we look to bounce around within the $30 range – a move down through $1148 would see the $1138 level in focus initially. A measured to move the $1130 level would be the overall expectation, in my opinion. Rising relative strength index on the hourly chart indicates that we could see a potential bounce back towards the $1160 level (MA confluence), which might in turn provide an additional selling point.

Silver RSI oversold

Silver has breached the bottom end of the recent trading range, falling to a low of $15.30/oz in early trade before recovering slightly. The RSI is oversold but not to the same extremes as witnessed in the earlier part of the month. Trading below all three hourly moving averages, resistance will be found at $15.50-60. A break below $15.28 targets $15.06. Only a move back through $15.80-90 would allow any change the current bearish trend.

Brent could challenge $79.52

Oil inventories yesterday helped oil prices shrink back even further, with another four-year low manifesting itself. Now well below the $80 mark, this is an area that will likely present a barrier in the event of a bounce from current levels. The coincidence of the 50-hour MA at $79.81 will also help to block any oil bullishness,

Given the extreme fall in oil prices on Thursday, the midpoint of yesterdays’ range at $79.52 could be challenged, a possibility upheld by the daily RSI rising from oversold.

A move down through the lows at $76.76 would set Brent on an initial course towards $75/bbl.

WTI pushes back from $73.26

Also seeing a small bounce in early trade, WTI has pushed back from the $73.26 level touched earlier this morning. A move through the $74.60 level could see the 50-hour MA at $75.79 targeted – this also coincides with the midpoint of yesterday’s range.

There appears to be little but ether between this morning’s lows and the $70.70 level.

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