Levels to watch: gold, silver and crude

Precious metals might be seeing a turnaround, while oil prices struggle to hold near last Friday’s highs.

Oil rig
Source: Bloomberg

Gold targets a bounce

Buyers came in on Friday for gold to keep the price above $1170, suggesting a bounce may be in the offing. Certainly the daily stochastic index is on the verge of turning higher, with a bullish signal likely tomorrow.

However, the price is struggling to break through the downtrend line on the hourly chart that runs from the spike we had last week.

A failure to break through this and consolidate above $1175 would suggest a move back in the direction of Friday’s lows and then on to $1150.

Silver could drop to April lows

Silver has stabilised off the $16 mark, but upside moves have been constrained by the 50-hour simple moving average at $16.17. I would regard any move through $16.50 as a bullish development, although would still wait for confirmation from stochastics on the daily chart.

Meanwhile, a loss of $16 would push the metal in the direction of the April lows at $15.60.

Brent could target $64

The $62 level remains key support here, as we saw on Friday, so we may be witnessing another oversold bounce. However, the hourly downtrend off the May highs remain in effect, so any move towards $64 for Brent should likely be regarded as the chance to sell again, with a target back towards $62 and then Friday’s lows at $61.

RSI bearish for WTI

Friday’s action saw buyers coming in around $57, but with daily stochastics and the relative strength index still bearish I suspect this is still a ‘sell the rallies’ market.

So far two recent attempts to breach the 200-hour SMA ($59.06) have failed, with the result that I suspect we will see a test of the $58 and $57.50 areas for WTI. A move through the 100-hour SMA at $59.40 would change the scenario to a bullish one. 

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.