Levels to watch: gold silver and crude

Precious metals are little changed this morning but oil prices have been routed once again, with Brent crude hitting the $100 per barrel mark for the first time in over a year.

An oil pump
Source: Bloomberg

Gold and silver are still looking under pressure on a longer-term view, and now that a ceasefire is holding in Ukraine one crucial price support has been removed. Perhaps the European Central Bank’s steady move towards full-blown quantitative easing will help matters to some extent, but overall the bear market still seems set to continue.

Motorists can cheer the decline in oil prices, which has been given renewed momentum due to the weakness in Japanese GDP and Friday’s below-expectations non-farm payroll figure.

Gold holds above $1260

The yellow metal is holding above $1260 for the time being, but with the price and daily relative strength index trends still downwards another retest of this area is on the cards.

A drop through here points the way towards $1240, the early June lows, with some possible short-term support around $1266.

On the upside, the metal needs to clear $1270, an area that has held back progress since last Wednesday. Above this a close above $1275 would be needed to sustain momentum.

Silver still heading for $18.75

The weekly chart shows that silver is still headed for $18.75, although on the daily chart there may finally be something of a short-term bounce in the making.

The metal is trading slightly higher today versus Friday’s close, with the RSI having pulled itself out of oversold territory. Any move upwards needs a close back above $19.20, but even then the $19.45 area is also going to be a problem.

On the downside, silver held above $19 last week, so this is the line in the sand for now, with any drop through here putting the focus on potential support at the aforementioned $18.75.

Brent could find support around $100 level

Brent’s losses continue but there is likely to be a lot of support around the psychological $100 level, as we arrive in this region for the first time since the middle of 2013.

Assuming this level holds then we are looking towards the top end of Friday’s range, around $102.30, close to the 20-day moving average. Brent is not yet oversold so another attempt to drop through $100 cannot be ruled out.

Below $100 targets the $98.65 area.

WTI testing $92.85 region

The $92.85 region was the key area for WTI in August, but we are testing the lower end of this zone today. A drop through here targets the January lows around $91.60, and with a way to go before the daily RSI flashes oversold this looks like a distinct possibility.

Any rally must clear $94 and then go on to challenge the 20-DMA around $94.50.

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