Levels to watch: gold, silver and crude

Commodities are creeping higher as traders square up their positions ahead of the non-farms payroll announcement. The recent strength of the US dollar could be reignited if the jobs report is strong, resuming pressure on commodities. 

Gold bars
Source: Bloomberg

Gold hits four-year low

Gold has been in a downward trend since the high of $1339 reached in July, with the selloff accelerated by the finishing of quantitative easing from the Federal Reserve last month. Overnight the metal fell to a fresh four-year low of $1132, triggered by a strong US dollar following Mario Draghi’s speech. It has recouped some of the losses since then but traders will be cautious ahead of the non-farm payrolls report.

The 100-hour moving average of $1155 is the initial target on the upside, and the next level to watch will be $1160; beyond that $1180. The relative strength index (one-hour chart) is telling us that the metal is out of oversold territory for now. If we drop below $1140 again, $1130 will be on the radar, with support possibly coming in at $1105.

Silver makes slight recovery

Silver has made a slight recovery, and is currently being supported by the 50-hour MA at $15.36. The near target is $15.68 and then on to $16.00. To stand any chance of snapping out of its downward trend it would need to confidently clear $16.25. On the downside, $15.20 is the initial target; if the overnight low of $15.06 is taken out then $15.00 will be in focus.

Brent eyes $83

Brent is edging higher this morning – it has moved above the 50-hour MA of $82.72 and is now eyeing $83. The next level up is $84 and then onto $84.45. Brent has made several attempts on $82 but can’t seem to puncture it. If the level is breached, traders will be looking to $81. Support will kick in at $80.

WTI downward trend running out of steam

Looking at WTI, the convergence of the 50-hour and 100-hour MA at $78.13 may suggest the longer-term downward move is running out of steam. A short-term change in sentiment could see WTI go to $79, and then the psychologically important $80 will be the one to watch. Beyond that, $82 will be in the cross hairs. To the downside, $77 will be in focus. If the recent low of $76.24 is reached, then $76 will be in sight. 

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