Levels to watch: gold, silver and crude

The week has started on a mixed note for commodities markets, with oil still falling while gold and silver make tentative gains. The signs are, however, that precious metals could be gearing up for a fresh move lower.

Oil poured into a drum
Source: Bloomberg

Gold struggling with $1240

Yet again gold still finds it difficult to move above the $1240 level. It has begun to do so once again this morning, but even if it does succeed in attaining this limited ambition the 50-day moving average at $1249 could prove to be problematic.

One sign of hope comes from the steady rise in the daily relative strength index, which shows that the buyers still have the upper hand. A close above the $1249 level would likely suggest a move to $1280 and then to the 200-DMA at $1285.

The hourly chart shows that $1243 and then $1250 should prove to be resistance, but dips in the direction of the 200-hour MA have so far been bought.

Silver outlook still negative

Silver’s bounce appears to have run its course, with momentum indicators pointing towards a potential move lower. The $17 level and then $16.80 become the targets if the current tight trading range gives way to a more sustained drop.

If we do see a revival of bullish momentum that carries us beyond $17.50 then short-term targets would be found in the area of $17.80 and then $18.40. I would continue to draw attention to the downtrend in silver that began back in July. The current upward move has yet to break this, so until this changes the outlook in my opinion is still negative.

Brent RSI still oversold

Brent is busily testing the water around just below Friday’s closing lows. A drop through $85.50 would then point towards the lows of last week below $84. Although still oversold on the daily RSI, recent price activity should act as a reminder that that an oversold reading is not always a prelude to a bounce.

On the hourly chart the price is doing its best to hold above the 100-hour MA, but for the moment moves above $87 have been short-lived. A rising 50-hour MA could provide a degree of support.

WTI lacking upward momentum

US light’s bounce from the $80 level is holding up well, even if for the moment upward momentum is lacking. For the time being upward moves target $84.90 and then the 20-DMA at $88. Meanwhile any drop lower will look to find support first around $81 and then $80.

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