Levels to watch: gold, silver and crude

A snapback in commodity prices is underway today, with modest gains across the board being seen.

Gold bars
Source: Bloomberg

Growth concerns continue to stalk markets, but the heavy selling of recent days has subsided, helped slightly by a small improvement in China’s manufacturing PMI. Eurozone PMIs this morning were of a distinctly mixed variety, but concerns of a slowdown in China will not be allayed by a single PMI reading.

Gold heading towards $1235

The $1214 level is holding so far as support, while the daily relative strength index has moved from oversold levels. Any definite move higher will require a close above the $1225 level and would target $1240 in the short-term.

A strong upward move has pushed through the 200-hour moving average. This now means gold is heading towards resistance at $1235 for the time being, although an overbought reading should flash warning signs.

Silver could target 100-hour MA

It is a similar story with silver, which has found buyers around $17.75 but has an awful lot of ground to make up if it is to reverse its current run of performance. The daily RSI still sits deep in oversold territory but even if this is worked off, and the price rallies to around $18.50, it could well be taken as a sign by shorters to sell once again.

The price has clambered through the 50-hour moving average, with the next target being the 100-hour at $18.21.

Brent finds support at $96.70

Brent may be enjoying a small bounce today but there is little to change the prevailing downside scenario. The $96.70 level is support, but even an extended move higher would have to close back above $99 to suggest the steady decline from the June highs has come to an end. The three main hourly moving averages are still providing significant barriers to progress, with the 200-hour at $98.18 the most noteworthy.

WTI breaks 50-hour MA

The $90.50 level for WTI was tested briefly yesterday, but buyers returned to the fray as they did on 11 September, indicating that short-term support lies here for now. We have broken through the 50-hour MA for the first time since 15 September, but the limit of yesterday’s progress was the $91.80 level and so this is near-term resistance for the time being. 

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