Levels to watch: gold, silver and crude

The positive US jobs report has dampened investor sentiment regarding precious metals, but given a much-needed lift to oil.

Oil pump
Source: Bloomberg

Investors shirk gold in favour of risk

Gold is trading at $1,240.9, adding 0.22%, at the London open on Monday. This follows a sharp decline on Friday, when a recent low of $1,228 was posted as investors preferred to diversify back into riskier assets following the release of better-than-expected US jobs data. The latter came in at 257,000 versus the expected 234,000. The improving US jobs landscape has fuelled speculation regarding a US interest rate hike.

Gold prices are likely to find support at $1,233 – a level that resulted in an oversold reading of 13.5, which is probably the main driver behind the current pullback. Should downside continue to hold, there’s likely to be a retesting of $1,242, which if broken could see a move higher with the 200-day moving average coming into play. However, should downside support fail to hold then the next clear downside level will probably be seen at $1,225.

Oversold silver recovers

Silver is trading at $17.02, up 1.51%, having been dramatically oversold on Friday following the better-than-expected US jobs report. This resulted in a low of $16.56 coinciding with an oversold relative strength index (RSI) reading of 20. Current price action has seen a retesting of silver’s 50-hour moving average, which is placed at $17.05, and if held could see a resumption of the previous bearish trend that might bring $16.74 back into play. However, should topside resistance at $17.05 be breeched then the next clear level is likely to be seen at $17.30.

Brent boosted by US jobs data

Brent prices are trading at $58.28, down 0.50%. Monday’s opening session has seen price action back off its Friday highs of $59.10 after the positive US jobs number, which boosted market confidence about US growth prospects, so supporting oil prices higher. The 50-hour moving average continues to act as a point of support, which if continuing to hold could well see a retesting of topside resistance of $59.90. If breached, this could lead to $60.24 – a move supported by a reading of 55.9 in the relative strength index (RSI) indicator. However, given that the current oversupply issue remains unsolved, with production levels failing to be curbed, it could see a reversal back down to $55.38.

WTI aiming at a double top

WTI is down 0.25% on Monday, currently trading at $52.57, having attempted a double top during overnight markets. It posted a recent high of $53.31 but failed to reach $54.26 (3 February). However, the bulls remain in the driving seat, according to the relative strength index (RSI) reading of 58, which indicates a period of expansion. It’s likely that downside support is going to be seen at around the $51.28 level, which if held could see a retesting of $53.16-53.96. Should downside support fail to hold then the next clear downside target is likely to be seen at the $49.39 level. However, price action will have to take out that 50-hour moving average at $51.10 before a clear downside bias can be seen.

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