Levels to watch: gold, silver and crude

Risk appetite seems to have returned to equity markets this morning, but the same cannot be said of commodity markets. 

Silver bars
Source: Bloomberg

Gold could target $1180

The beginning of 2015 was greeted with jubilation by gold fans as the price finally managed to close above the monthly downtrend that had dominated since the latter half of 2012.

However a continuation of the recent falls in price threaten to produce a close below this monthly trendline, a bearish signal. Combined with a bearish crossover in monthly stochastics, this could be the signal for an impending move lower in gold that may take it to fresh multi-year lows.

Dips below $1160 were bought yesterday, but a close below here on the daily chart will open the way to the bottom end of the current descending channel, around $1140, which would also coincide with the November 2014 lows.

Only a close back above $1180 negates the bearish outlook.

Silver remains a 'sell the rally' market

Selling in this commodity has paused around $15.70, but this may be just a short-term respite. The daily relative strength index is moving higher but remains oversold, while stochastics sit at levels not seen since early October. This remains a ‘sell the rally’ market, with any move back in the direction of $16 and the January downtrend line being regarded as a selling opportunity.

Brent could test $53.90

The sharp drop in crude oil will have caught a few people by surprise, but the price outlook here has turned very bearish. The daily RSI is in full retreat, along with stochastics, with a close below the 50-DMA signaling that a test of levels around $53.90 is likely.

The $56 mark is short-term support on the four-hour chart, with a small rebound apparently underway in this time frame. However, this is likely to bring out fresh sellers in due course once momentum indicators turn bearish again.

WTI eyes $45

Selling here continues to run into support at $48.50, but a close below here would target the $47 level before heading towards $45. US light crude's daily RSI and stochastic readings remain bearish, with a close today below the 50-DMA signaling that the lows of January may be tested in due course. 

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