Technical analysis: key levels for gold, silver and crude

The dollar basket is now at its highest level since 2013. The market is currently altering positioning in anticipation of an end to quantitative easing and the potential for rate hikes to occur.

Oil being poured into  a drum
Source: Bloomberg

The strength of the dollar is not without some casualties. The commodities suite remains under pressure as a result of the hawkish sentiment surrounding the greenback, while a lack of global growth coupled with the weak Chinese and Eurozone PMI today is capping any real upside in oil prices.

Gold’s allure seems to be taking a back seat for now. The lack of yield juxtaposed with the bounce back in equity markets, and the S&P 500 making yet another intraday all-time high along with the distinct lack of near-term inflationary pressures signals that investor appetite will remain underwhelming.  

Gold retreating below 200-DMA

Minutes from the most recent Federal Reserve meeting indicated that a rate hike was debated, in light of an improving jobs market and rising yet subdued inflation. Even investor nervousness around the conflicts in the Middle East and Ukraine has failed to put a fire under the price of the metal.

Now that we are watching the gold price retreat below the 200-day moving average, there is a greater bias for additional downside. The crux support lies at $1270 and the rising trendline from the lows last seen in December 2013. Only a break above the $1340/oz mark would reverse the current reverie in the shiny metal.

Silver still struggling with resistance

Still capped by resistance at $19.52, the silver price has seen a mild bounce from the $19.33 lows of yesterday. A break of the support targets $19.00. Any push back above $19.54 could see the price challenge the upper band of the down trending one-hour channel at $19.80.

Brent's downtrend still remains

Strong US demand may now start to be a factor in oil prices. The Philadelphia Federal Reserve Business index beat expectations, existing home sales have also jumped higher in July and manufacturing output is at a four-year high. Much of the disappointment over the Q1 GDP figure also seems to have been put to bed. It appears weather was a factor for the decline in growth in the first part of the year after all.

Unable to move higher than $102.35 yesterday, the downtrend in Brent still remains. We may be seeing signs of a bottom at the $101.12/bbl mark. A break back through $102.63 targets $103.18.

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