Levels to watch: gold, silver and crude

Precious metals are in demand this morning, although oil has started the week on the back foot, despite three consecutive weeks of gains. 

Gold bars
Source: Bloomberg

Gold above 50-DMA

Having bounced off the 100-day moving average last week, the price is now moving back above the 50-DMA as well. In conjunction with this, the daily relative strength index has broken through its descending 10-DMA, while the stochastic momentum index (SMI) appears to be about to give a bullish signal.

If this continues, we can look towards further upside, first in the area of the 200-DMA at $1247, and then to the top end of the current descending channel at $1260. Before that the price will need to break the descending trendline off the January highs above $1300 (most obviously visible on an hourly chart). Dips towards $1230 will encounter rising trendline support off the $1220 level.

Only a close below the 100-DMA will firmly negate the appearance of a turning point having been reached.

Silver begins move higher

Having firmly bounced off the rising trendline from the December low it looks as if the move higher in silver has already begun. The price has moved above the $17.39 resistance area, and while the 20-DMA might delay the upward move the real target now is the 200-DMA at $18.15.

The daily RSI and SMI indicators have already given buy signals, as the former crosses above its 10-DMA and the latter’s momentum line is moving above its signal line counterpart.

We may still see dips towards the 50-DMA and the $17 area, but only a daily close through $16.60 cancels out this rising trend in price terms.

Brent continues its rise

Brent crude continued to gain on Friday, and this morning the price hit its highest level since Christmas Eve. A firm close above $62 reignites the rally here, even as the price heads towards overbought levels on the daily RSI.

The hourly chart shows a modest pullback from Friday’s high, with a move lower likely to take it back towards the 200-hour moving average at $57.90 and the rising trendline from the $50 level seen at the end of January.

WTI momentum stalls

US light crude is also enjoying a bounce, although momentum has stalled as the price heads towards the area above $53 a barrel. The price found good support off its own rising trendline, and another test of this area would take us in the direction of the $50 mark.

Having closed (just) above the 50-DMA on Friday, and with the daily RSI above its 10-DMA as well, the next target becomes the $55 level, although with the US closed for Presidents Day this is a target that will mostly likely be delayed until the end of the week.

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.