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Levels to watch: gold, silver and crude

Inventories data sends crude prices sky high.

Oil storage containers
Source: Bloomberg

Gold consolidation sees price tightening
The past fortnight has seen the price of gold consolidate following initial support having been found upon the 50% retracement of the March low ($1142) to April high ($1224). However, since then price action has been trading within the $1209-$1192 range. Given that this same range was respected back in late February/early March, I believe we could be seeing an inverse head-and-shoulders formation. Thus a break above $1224 would see the completion of the move and would bring a target of $1305.

That being said, for now I expect sideways consolidation to remain dominant, and thus my preference is sell into rallies around $1209 and buy moves down to $1192. A notable break out of the range would then move me into a wait-and-see phase, where prices would have to move below $1178 or rise above $1124 to signal the next move.

Silver edging lower towards trendline support
Silver has been gradually shifting lower following resistance provided by a key descending trendline dating back to mid-July 2014. However, with price currently at $1600, it is not long until prices return to the bottom of the symmetrical triangle seen over the last six months.

Recent consolidation this week has held the $1614 support and new-found resistance, and as such, I expect selling to resume in the near future. With that in mind, I am bearish for silver until price reaches the support zone between $1559 (symmetrical triangle bottom) and $1529. This bearish view would be invalidated should price move above $1650.

Brent selling off ahead of inventories number
Last week saw the price of Brent crude spike higher following a second highly volatile shift in US oil inventories. This afternoon marks the return of that data release, for that reason, I am expecting volatility to increase in the oil markets today.

Friday’s hanging-man candle seems to have marked a top for now and price has moved back below previous resistance of $6300. With the MACD histogram seemingly only partially into its downturn, and the stochastic exhibiting a bearish cross in overbought territory, I expect more losses to come. The next support level is at $5980, followed by $5780. However with inventories due out this afternoon, I am aware that fundamentals are likely to also have their say today.

WTI losses facing key support level
Much like Brent, WTI light will likely take some sort of kick to the proverbial rear-end once crude oil inventories are released today. Given that they are reflective of the US market, WTI would be relatively more affected than Brent and thus I would be aware of holding positions ahead of that release.

Price has broken below $5640 support and this makes me think we are likely to see it return to $5423 in the near future. That being said, in the short-term, I do believe it likely to see some strength come back into intraday markets for a retracement towards the $5640-$5686 resistance zone. Should any such retracement hold up at resistance, then this would provide a better price for the move down towards the next support of $5423.

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