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Levels to watch: gold, silver and crude

Gold may well have finally found a bottom, while oil prices have seen some buying following Janet Yellen’s comments yesterday.

Oil pipework refinery
Source: Bloomberg

Gold RSI still has upward momentum

False dawns have been seen in gold quite often in recent weeks but with the RSI and SMI finally breaking higher and the November uptrend still holding gold bulls might have better days ahead.

Two days of volatile trading have seen the price dip repeatedly below $1200, but today the price has moved higher, rising off the November trendline and targeting the 100-day moving average at $1215.

If the RSI maintains its upward momentum then there is case for gold to target the $1230 level, followed on by the 200-DMA. A drop back below $1200 and a close below the November trendline would negate this and reopen the way to $1180.

Silver could drop to $15.50

Silver has yet to repeat the achievements of gold, and continues to sit below its December trendline. For now the 50- and 100-DMAs are providing significant upside resistance, and even a move through these would take the price back to the downtrend off the January high.

Nonetheless, the daily RSI is moving higher and crossing above its 10-DMA, while a bullish crossover is seen on the SMI. Assuming a close above $16.80 can be managed then silver may follow gold’s lead. A drop back below $16.20 is then likely to take us back to $15.50.

Brent eyes $52 as near-term target

For a second day the 20-DMA is providing support for Brent, but the RSI and SMI indicators still point to additional downside, with a target around $52 in the near-term. Meanwhile the price needs to break above the February high to turn this move lower into a pullback in a longer-term trend.

WTI could test $45

A second day for US light crude below the 20- and 50-DMAs confirms the problem of moving average crossover systems, namely that they can miss moves. Although the 20-DMA is crossing above its 50-DMA the ongoing bearish readings from the RSI and SMI point to a test of $45, if support at $45.10 is breached. 

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