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Levels to watch: gold, silver and crude

Possible quantitative easing in Europe adds to uncertainty which weighs in on commodity prices.

Silver bars
Source: Bloomberg

Investors seek safe haven in gold

Gold prices have pushed higher on Monday, continuing a bullish trend from its previous low of $1,168 (2 January) to its current level of $1,194 as markets continue to anticipate not only the impact from possible monetary easing from the European Central Bank, but also reports that Germany are willing to let Greece exit the trading bloc.

While the recent reports of a Greek exit may be unfounded, in times of uncertainty traders favour perceived safe havens, which at present is the driving force behind the recent bullish sentiment in gold. Having failed to push through key topside resistance at $1,197.1, it appears a short-term pullback could be seen as a result, which could retest downside support at $1,192.2.

Silver aiming to break out of consolidation

Silver prices are also benefiting from the market uncertainty emanating from Europe as prices tick higher heading into the London open session on Monday, currently trading at $16.08. However, despite moving higher, price action continues to trade within a consolidation range between $16.15-$15.62.

A breaking of either level will be needed before any directional bias can be ascertained. However, given the macroeconomic backdrop of uncertainty, it is likely that a continued uptrend will be seen and should that take out topside resistance of $16.15, then the next clear level of resistance could be seen at $16.29.

Continued USD strength pushes Brent to a fresh low

A stronger dollar has continued to suppress Brent crude prices, which saw a fresh multi-year low of $55.25 per barrel posted during the overnight Asia session. However, at the London open, the dollar uptrend has come off its highs allowing Brent prices to rally off the recent low to its current price of $55.70.

Downside resistance looks to come into play at the $54.70 level, which given a current reading of 42 in its relative strength index, could signal further weakness. Should $54.70 fail to hold then the next clear level of downside resistance is likely to be seen at $54. However, should near-term resistance hold then a retesting of $56.41 could be brought into play.

Global growth concerns continue to cap WTI gains

Similarly to Brent, Oil - US Crude prices continue to play to the bullish dollar’s tune, which has most recently seen a fresh low of $51.44 posted during the overnight session. This has since seen prices rally to $52.04. With global deflationary pressures failing to subside and the additional possibility of monetary easing from the European Central Bank, global growth concerns are heightened, which continues to have a net-bearish effect on oil prices. With no clear answers to these concerns, oil remains on the back foot.

Downside resistance appears to present itself at $51.28, which if held could see a continued short-term reversal that could retest $53.16-$53.96. However, should said resistance fail the next downside target to come into play could be seen at $49.40.

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