Levels to watch: gold, silver and crude

US dollar rallies on Federal Open Market Committee release, adding to bearish commodity sentiment.

Silver bars
Source: Bloomberg

USD support weighs on gold

Gold has rallied back into Wednesday’s intermediate risk range, after seeing a short-term drop to a low of $1,183 back to a daily high of $1,202. The turnaround came on the back of a release from the FOMC in which, despite a change in language when contextualising any possible rate rise, Federal Reserve chair Janet Yellen stressed that there was no change in its targets, nor in the outlook for the US economy. As a result, both the dollar and US equities moved higher, adding downside pressure to gold.

Following its move lower, gold has now rebounded and remains in a trading range of $1,200 and $1,197, which now serve as an intermediate risk range. Should a close below this range be seen, then a re-testing of $1,192 is likely, but should a continued recovery be sustained then the next area of likely resistance presents itself at $1,204.

Silver recovers losses

Silver prices posted a low of $15.53 following the short-term selloff in precious metals after the FOMC release. However, prices have begun to recover, heading toward topside intermediate resistance at $16.22, which if broken could see a move higher to $16.64. However, should downside pressure resume then a close under  $15.53 could result in a move to $15.28.

Short-term Brent rally already over?

The short-term bounce in Brent prices proved to be just that, failing at a previous intermediate topside resistance point of $63.53 and closing just shy of $63.48. Brent has since remained there with some upside support, and could attempt to breach the aforementioned topside level which will need to post a close above in order to confirm a bullish trend, which could then see a re-testing of $65.56. However downside risk remains intact, with targets at $57.67.

WTI recovery remains intact

WTI prices have continued to rally off Tuesday’s low of $53.60 to the current level of $58.24, with topside targets at $59.89. It is now supported by an expansion reading in its relative strength index, currently trading at 62.3.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.