Technical analysis: key levels for gold, silver & crude

Gold’s drop on Friday has seen it reach key support, while the oil rally has lost momentum for now.

Source: Bloomberg

Gold struggles to regain losses
Having had a torrid session on Friday, gold is battling hard to recover lost ground and stay above $1180, the key support level from the past six weeks. A break below here would put the cat among the pigeons, and raise the possibility of a move to $1160 and then down to $1140. With the 50-day simple moving average (SMA), $1193, acting as resistance the sellers are in control here, as the tight trading range that dominated for most of April gives way to a hefty move to the downside.

The sequence of lower highs and lower lows tends to confirm the theory that a fresh downside has opened up in gold. This has been accentuated by the lack of progress regarding Greece and the fact that the ‘dovish central banks’ theme of Q1 has lessened somewhat. A recovery of $1200 would signify a recovery, but this looks unlikely at present

Silver looks to halt downward move
The steady downtrend in silver, captured nicely by the downward slope of the 5- and 10-day exponential moving average (EMA), may be coming to an end, if the price can hang on above $15.80. Friday’s move took it to its lowest level in a month, but the recovery signals that buyers may be mounting a new attempt to push the metal upwards.

The daily relative strength index (RSI) and stochastics have turned positive, although a daily close in the same vein will be needed before taking a position based on these signals. A bounce may find trouble breaching resistance at $15.97, and then the 14-day EMA ($16.10).

Brent crude slips lower
Yet again, Brent crude finds itself back below $65, as it struggles to build on three consecutive sessions of gains. This may be another pullback in a broader trend, with possible support at the 14-day EMA ($62.26), before another leg higher.

A failure to hold this line would then suggest another dip down to the 50-day SMA ($59.10), with a further target of $55 if the selling intensifies.

WTI battles on
The current range for US light is $56 - $58, the price having slipped back from last week’s highs. For now the price is battling to hold above the 200-hour SMA ($57). The first target is $58 if it bounces, and then on to $58.86. Downside support is likely first at $56 and then on towards $53.86.

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