Levels to watch: gold, silver & crude

Oil prices continue to gain ground, but precious metals find themselves unable to benefit from risk-off sentiment as the dollar strengthens.

Oil barrels
Source: Bloomberg

Compared to the turmoil in equity markets commodities have been relatively calm. This is not expected to last however, especially if the greenback rally gets underway in earnest once more as the dust from the Federal Reserve meeting settles.

Gold to test $1210
For the moment $1200 is holding as support, coinciding with the 14-day exponential moving average at $1199.70. Two days of attempts to break through $1210 (and the 100-day simple moving average [SMA]) have failed, so this is the first hurdle to clear if we are in for another run at the 200-day SMA at $1223.60. A break below $1200 would head towards $1180 and the lows of the year around $1150.

Nonetheless the longer gold stays above $1200 the more conviction I have that a longer-term move higher is on the cards. A challenge of the 200-day SMA would be a test, but a move through here clears away much of the resistance that would impede a move to the 2015 high of $1300.

Silver appears to have stalled
Gains on silver have stalled around $16.60, and the price remains below the descending trendline from the January highs. Upside resistance is to be found at $16.90 and then the 200-day SMA at $17.20. Having seen a bounce last week from the rising trendline off the December lows, silver now needs to capitalise on this with a more sustained move through $17. A failure to keep moving higher brings support at $15.70 and then on to the March lows around $15.30.

Brent continues upward
A turnaround in yesterday’s session has seen the price of Brent crude push beyond $65 and back towards the highs for the year. There may be more to come, especially since yesterday saw a decent bounce off the 50-period SMA at $64.10 on the four-hour chart. Dips back towards this moving average should be regarded as buying opportunities for the time being.

WTI may move higher
We may have seen the breakout from WTI light's sideways price action of the past two weeks, and if a daily close above $59.20 materialises there will be more room to the upside. The confluence of the major moving averages on the hourly chart seems to be coming to an end, as the 50-hour SMA moves above the 200-hour, a sign that a new leg higher is on its way.

As before, $56 remains key support, so only a break below here would signal that the bears are in control. A move back below $58 would be an indication that we have seen a false breakout and that more rangebound trading is in order.

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