Levels to watch: gold, silver and crude

Investors continue to seek safe havens amid global uncertainty regarding central bank policy.

Silver bars
Source: Bloomberg

Surge in gold continues

Gold has continued to garner widespread support adding 1.36% on Tuesday, as nervous investors continue to favour safety given that the uncertain economic backdrop of global growth, which continues to be hampered by sliding oil prices, appears to be indicative of a deflationary environment. An announcement on Thursday from the European Central Bank  regarding its latest interest decision is likely to result in a sharp increase in volatility as markets brace themselves for any hint on monetary easing, which, if seen, is going to fuel the bullish run in gold.

Tuesday’s sharp move higher to $1,292 has resulted in an overbought reading in its relative strength index, which is likely to see a short-term pullback, bringing previous support at $1,274 back into play. Should previous support hold, it’s likely to see a resumption of the strong bullish trend with an upside target of $1,303.

Silver gathering support

Silver is also being supported on the back of investors preferring to allocate funds into safe-haven assets at a time of central bank uncertainty. Silver is currently trading at $17.94, adding 1.46% on Tuesday, taking out Monday’s high of $17.97. This has resulted in a move into overbought territory, according to its RSI reading of 72. As a result, a pullback is likely to be seen, which could see a re-testing of Tuesday’s low of $17.62 brought into play. Should this downside target hold then a resumption of the previous uptrend is likely to take aim at topside resistance at $18.01.

Brent mutes on positive Chinese data

Brent prices are trading at $48.67, down 0.42% on Tuesday after the release of data from Iraq showed record oil production. Even better than expected growth data out of China wasn’t able to stir bullish activity as prices re-test downside support level at $48.19. If they continue to hold we will probably see a bounce back to the previous level of topside resistance, $49.16. However, price action will need to break through the 100-hour moving average at $48.90, and this could then lead the way for a re-testing of a key psychological level of $50.

Unchanged fundamentals leave WTI mixed

Having touched a high of $49.30 WTI prices are currently trading at $47.74, supported by the 100-hour moving average. If respected prices could then see a re-testing of the 50-hour level, currently trading at $48.13. However, with fundamentals failing to improve a break below $47.60, $47.23 is likely to come into the crosshairs. 

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