Levels to watch: gold, silver and crude

Precious metals are moving fractionally higher today but still seem to be continuing the losing streak begun last week. Meanwhile oil prices are struggling to hold their meagre gains.

Silver bars
Source: Bloomberg

Gold could drop to $1220

The drop back from the 50-day moving average last week and a turn down in the daily relative strength index seems to suggest that gold is moving back to challenge $1220. A close below this level would then open the way to $1215 and then $1200, although the 20-DMA may provide support in the short term.

Moves upwards have been contained by $1235, while the descending 50-hour MA should also cap progress. Downside targets in the near term lie around $1227 and then $1222, while any move upwards still targets $1240.

Silver’s bearish scenario intact

Friday’s close below the 20-DMA still leaves the bearish scenario intact, while in addition the steady July downtrend reigns unchallenged.

Declines target $17.05 and then $16.75, while any moves higher for silver are still heading for $17.33 and then the aforesaid trendline at $17.37.

Brent meets resistance at $87

The test of $87 that we saw twice last week has confirmed this level as a notable hurdle for Brent, while the drop back below the 200-hour would mean that the $84 low from last week is back in play once more.

The intraday RSI is declining from its Thursday peak, along with the stochastic momentum index, suggesting more short-term downside is on the way.

Any move back above $86 still needs to clear $87 to be in with a chance of reaching the $88.44 area.

WTI could fall below $80

US light tried to clear the 200-hour MA last week but was knocked back, reigniting the downside scenario and suggesting we could see another attempt to break below the $80 support zone that has held throughout October so far.

A close back above $81.85 would provide some short-term relief for the longs, but would still stumble around $82.60 and then $85.

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