Levels to watch: gold, silver and crude

Risk appetite is lifting oil once again, but base and precious metals are little changed so far this morning.

Silver coins
Source: Bloomberg

Gold eyes resistance at $1240

If gold can hold the $1220 level today, we could be seeing the beginning of a bounce that might see a test of $1260. The 50-day moving average is providing some resistance this morning, but a positive close today would be the first time gold has gained in two consecutive sessions since late January.

First line resistance is at $1240, followed by the 200-DMA. The rate of decline in the daily relative strength index and also the stochastic momentum index (SMI) has slowed, and I would watch for the RSI to cross its 10-DMA, while the SMI could be about to register a bullish crossover.

Over the past few months the SMI has done well to call tops and bottoms in gold, so we will see if its performance can be maintained.

Silver targets close above $19

This metal continues to bounce along the trendline from the December low, with a close above $19 likely to restore bullish momentum. This would set the metal up nicely for a run back to the 200-DMA, at around $18, with the small bounce in the RSI indicating that buying momentum may be gaining ground.

Brent outlook bullish

Yesterday’s bounce in Brent has transformed the situation for the time being, with the more bearish outlook shifting back to a bullish one. The price stabilised yesterday off the 50-DMA, and then proceeded to push through the downtrend line that has been in place since October.

An immediate upside target now is the $62.40 zone, followed by $64.80, the third level of resistance on the daily pivot points. On the downside the 50-DMA now provides support, should the session see a weakening of the current direction as the weekend approaches.

WTI stuck below 50-DMA

Although it too managed to reverse early losses, US light has not rallied to the same extent as Brent. Instead, it finds itself still stuck below the 50-DMA. A close above this indicator would generate the needed positive signal, especially as the RSI rises once again.

The $54 level is the target for the moment, the highs for the week, while beyond this lies the $57.70 area. Support could be located in the area of $49.20, along the rising trendline off the January lows. 

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.