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Levels to watch: gold, silver and crude

The Federal Open Market Committee statement takes the shine off precious metals as dollar bulls resurface.

Gold bars
Source: Bloomberg

Gold demand subsides

Gold prices are trading at $1,276, down 0.67% following Wednesday’s release from the FOMC in which an unchanged policy of 'patience' regarding any potential interest rate hike was maintained. However, dollar bulls weren’t deterred by the lack of bullish rhetoric as the dollar was broadly supported against its major counterparts, which capped any upside in gold as the precious metal broke below its 50-hour moving average at $1,286. This is now likely to act as an area of topside resistance, and if held could see further downside targets of $1,270 brought into play. The overnight move has prompted an oversold reading in gold’s relative strength index, possilbly leading to a retest of $1,280 in the short term.

Silver prices correct to the downside

Silver prices have lost 1.77% on Thursday, currently trading at $17.66, as the demand for precious metals subsides following the FOMC statement that favoured a wait-and-see approach regarding rate hikes – a decision that is likely to be driven by economic data.

Silver prices broke below key support at $17.70, an area that may become resistance and lead to a sharp drop to the next clear level of support at $17.11. However, should prices recover and support be restored at $17.70 then a possible retest of the 50-hour MA at $17.98 could come into play.

Brent remains under pressure

Brent prices were largely muted following yesterday’s FOMC statement; this resulted in price action continuing to trend inside a tight band of consolidation between $48.19- $49.16.

The oil is currently trading at $48.96, adding 0.63% which saw price action break above its 200-hour MA of $48.87. If this move is held, a retest of the topside area of consolidation at $49.16 is possible, then likely leading to $50.06. A failure from the FOMC to move towards a rate hike, and the backdrop of uncertainty regarding global growth – which has led to a surplus in Brent supply – is likely to cap any substantial upside and could result in a move lower toward the $48.19 level.

WTI eyes rally off fresh multi-year low

WTI is trading at $44.61, adding 0.33% on the day as prices aim to recover overnight losses that saw a low of $44.09 posted, testing downside support before retracing back to its current level with upside targets of $45.52 in the crosshairs. Should topside resistance hold then a resumption of the previous bearish trend is likely to re-emerge, and could see a retest of downside support at $44.35. However, if price action breaks above the $45.52 level, then the next clear level of resistance is likely to be seen at $46.34.

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