Technical analysis: key levels for gold, silver and crude

Gold and silver are bouncing from recent lows this morning, following Mario Draghi’s comments at Jackson Hole, while oil prices are looking slightly more robust.

Silver bars
Source: Bloomberg

However, the overall picture remains little changed, with the broader sector still out of favour.

Gold may not push higher

Gold is having its best day in quite some time, and it is possible to draw a positive trend running from the June lows, but the $1290 area is already proving to be a headache. Gold is having a late bounce from the Jackson Hole speech by Mario Draghi, which seemed to boost the case for quantitative easing by the European Central Bank, while the continuing struggle in east Ukraine is still making investors nervous.

However, even with the price above the 200-day moving average, it doesn’t look like there is much appetite for pushing gold higher. A series of lower-highs is arguably developing, having seen the metal fail to hold $1340 and then $1310.

A drop back below $1275, and through the previously mentioned trendline, would open the way to another test of the sub-$1250 area. Any gains to the upside need to sustain themselves above $1300 to suggest that another attempt to break $1310 is on the cards.

Silver could test $19

Having returned from a week away I note, with a degree of satisfaction, that silver is still not able to break the trendline running from the July highs.

Even with the daily relative strength index moving sharply higher today the metal still seems to be on course to make another test of $19 — a big level of support that has held the market up since December of last year. Below that, the weekly chart indicates that weakness in the direction of the $18.65 area may prompt some buyers to step in.

The hourly chart continues to display an overbought reading on the intraday RSI, while the attempt to clear $19.60 has been beaten back. Even if the downtrend from the July highs is not tested, the 200-hour MA has acted to stop any sustained move to the upside.

Brent sees little change

There has been no real change to the bearish scenario in Brent, although the dip through $102 has been turned around for the time being. Now we look towards a move back above $102.90 to be sustained, otherwise the $101.50 level could provide some support. The daily RSI has stubbornly failed to move above 50 in August, so until this changes buying pressure remains conspicuous by its absence.

WTI below 200-hour MA

A glance at the weekly chart shows that WTI is not too far from a support zone around $92.70, which provides some hope for WTI bulls who have seen a drop of almost 13% since the June highs. With the commodity still just about oversold there hasn’t been much sign of real bounce. The $94 level remains resistance on the upside, but while the price remains below the 200-hour MA the picture remains a bearish one.

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