Levels to watch: gold, silver and crude

Markets return to a risk-off sentiment which is boosting the dollar and stocks while capping gains in commodities.

Oil pipework refinery
Source: Bloomberg

Gold loses its allure in risk-off market

Investors continue to unwind risk-off positions which has resulted in a continuing bullish trend in the dollar and a rebounding in global equities, both of which continue to take away from the allure of owning gold. At the London open on Thursday, gold prices are trading at $1,207.9 having met downside resistance at $1,206.5. This level must be broken in order to confirm a continuing bearish trend, which has seen the price fall 1.28% from its 6 January high of $1,223.

Further downside is supported by the relative strength index which is currently showing a reading of 41. Having already broken through its short-term 50-day moving average, the downside target now presents itself at the 100-DMA at $1,203.7.

Silver prints bullish higher-high

Silver prices have continued to chop higher on Thursday posting a lower-high at $16.36. The previous low of $16.30 will need to be held in order to confirm a bullish bias, which if achieved could see a retesting of upside targets at $16.45-$16.52.

However, should the previous low be taken out, a trend which is currently being supported by a contractionary reading in silver’s RSI of 39, then downside levels of $16.15 are likely to be seen.

Bounce in Brent likely to be short-lived

Brent prices bounced off multi-year lows of $49.66 on Wednesday, to its current level of $51.26 having posted an oversold level of 27 during Wednesday’s session. Topside support is currently trading at $52.26, which if held is likely to result in a retesting of further downside in which targets of $49.16 are likely to be seen.

WTI fails to break key topside level

WTI snapped back to a previous level of downside support at $49.39, which has subsequently seen the short-term bullish trend fail and reverse to its current level of $48.70. Should topside support continue to hold, a retesting of previous downside target at $46.72 is likely to be seen – a trend supported by a RSI reading of 46. 

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.