Levels to watch: gold, silver and crude

Deflation remains the overriding theme pushing commodities lower.

A man near an oil pump
Source: Bloomberg

Gold backs off the highs

Gold prices have chopped lower, backing off the $1,238 high on Tuesday to its current price of $1,224. This came following a spate of buying activity on the back of a continuation in the bear market in commodities, which has exacerbated global deflationary fears and in turn has seen a heightened demand for safe-haven assets such as gold.

Downside risk ranges are at $1,215 which has acted as support, and should it continue to do so the next clear area of topside resistance presents itself at $1,242. However, if the short-term rally reverses through $1,215 then a retest of $1,208 is likely to be seen.

Silver remains muted

Silver prices remain in a week-long consolidation pattern, with an immediate downside risk range of $17.11 continuing to hold following a close above during the London open session. Should a break above the topside resistance consolidation be seen, which at present is at $17.20, then the next clear area of resistance to the topside is at $17.70.

Brent prices continue to be depressed

Brent prices posted a fresh multi-year low of $63.04 in pre-London market trading, breaking below what had acted as an area of short-term resistance at $63.53. Should a close be seen on an intra-day timeframe, it could signal a further decline to $62.

WTI remains without support

WTI prices broke below a key technical area of support at $59.89, which could result in a significant move lower with the next clear area of resistance not being seen until the $53.96 level. If the aforementioned level continues to act as support, it will likely be retested over the near term, owing to an oversold reading on the relative strength index of 27.

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