Levels to watch: gold, silver and crude

Precious metals have fallen back this morning, but oil is holding on to its gains. 

Silver bars
Source: Bloomberg

Gold stuck below 50-DMA

Gold has fallen through the hourly trendline I highlighted yesterday, but for the time being it has stabilised around the $1220 level and just above the 100-day moving average. A break through here would target the rising trendline off the November lows, around the $1200 level.

Momentum indicators have yet to turn positive, with the daily relative strength index declining trend still in place. The price also finds itself stuck below the 50-DMA, with the indicator still capping gains for the time being. The $1250 level is the first upside target if gold can manage a daily close above this line.

Silver could drop to December lows

This metal finds itself bouncing along its rising trendline from the December low, having dropped back sharply as risk appetite diminishes following the failure of the eurozone to make any progress with regard to Greece.

If the trendline holds, and a rebound is possible given the sharply oversold reading on the hourly chart, then we look towards yesterday’s peak around $17.40 and then a move towards $17.60.

A drop through the rising trendline and the 50- and 100-DMAs would then open the way to the lows of late December around $15.50.

Brent could find support at $59.80

A quiet session yesterday finds Brent still holding on to gains from last week. A rising 50-hour MA has underpinned the price so far, with initial resistance around $62.50, followed on by $63.70. The price is some distance from the 200-H MA and the trendline from the January low, so a pullback would take us back towards $58, with some support possible at $59.80.

WTI RSI declining 

US light crude is still unable to make much headway above the $53 mark. So far in February, intraday gains above here have been fleeting, so we need to see a firm close above this mark to maintain the momentum that has seen the price rally by more than 14% in February.

As with Brent, WTI is pulling away from its rising trendline, and with the hourly RSI steadily declining, we could see a test of the $51 zone in coming days if a pullback materialises. This would provide a good entry point for those looking for a continuation of the trend. 

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.