Levels to watch: gold, silver and crude

Global growth concerns see investors take a risk-off approach.

Gold bars
Source: Bloomberg

Gold shines on

Gold has undoubtedly regained its allure as the precious metal continues to be favoured during the current market uncertainty, adding 0.76% today following a gain of 1.72% on Monday. However, given the spike in demand for gold, it has now posted a reading of 72 in its relative strength index, suggesting the move is overbought, and could see a short-term pull-back. This could result in a retest of previous downside support at $1,208. Should downside support hold then it’s likely the bullish trend will resume, with upside targets of $1,215-1,226.

Silver looks to sustain uptrend

Silver prices also continue to benefit from a flight of risk-off capital, which has seen the majority of global indices turn lower in favour of safe-haven assets. Since the new year, silver has added 3.79%, and has most recently broken through a key resistance level of $16.19. This is likely to turn into support, and if held could see a move higher to $16.45 – a move supported by a bullish RSI reading of 61.

Brent posts fresh multi-year low

The sharp move lower in Brent shows no signs of slowing after posting a fresh multi-year low of $51.15 today; a move which has been precipitated by a OPEC’s decision to leave production levels unchanged, thus creating a supply/demand imbalance. A strengthening bull trend in the US dollar has been adding further pressure, and is likely to cap any possible upside.

The break below $52.26, which was previously providing key resistance, is likely to turn into support, and if this is held we could see the downside support level of $49.16 come into play.

Oversold WTI remains in bear trend

WTI posted a fresh low of $48.50 today, a return to levels not seen since 2009, as fears regarding global deflation as well as the impact of monetary easing from the European Central Bank begin to be priced in by the market. At present, market participants prefer to take a risk-off approach, which is supporting the US dollar and thus negatively impacting WTI demand.

Intermediate topside support in WTI is currently trading at $49.39, and if held it is likely to see further downside target of $46.72 come into play. 

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