Technical analysis: key levels for gold, silver and crude

Gold and silver are back in favour thanks to the developing Iraq situation, while Brent crude has seen some buying as well. Abundant supply in WTI means that the rally here has been less marked.

Silver bars
Source: Bloomberg

Gold could find support at 50-hour MA

The safe haven trade is back in fashion, with gold spiking to the $1320 level before settling back. A close through this level would suggest a move back in the direction of $1340, from the July highs. In the short-term, watch for resistance around $1325, while the rising 50-hour moving average should provide support.

The daily relative strength index has moved firmly above 50, shaking off the uncertainty seen earlier in the week, while a positive crossover on the daily moving average convergence/divergence is underway as well. The first-line of support could be $1307, while beyond that $1299-$1300 is the next area to look out for buying.

Silver could break 200-DMA

A weekly chart shows that silver’s range is currently $18.50-$22, while the climb through $20 puts the metal on course for a break through the 200-DMA.

The RSI has begun to move higher, reversing the downward trend that prevailed for July, but the actual price downtrend is still intact. Silver thus needs to break $20.24 to firmly end the run of losses that has marked its descent from $21.50. On the hourly chart the move above the 100-hour MA is an encouraging one, but a nudge into overbought on the intraday RSI may mean the end of the week is fairly choppy.

Brent prices surge after US intention

News of the US decision to be more interventionist in Iraq sent oil prices surging yesterday, with Brent challenging the 20-DMA for the first time in a number of sessions. For now however it remains off the highs, but the daily RSI has begun to move higher in a more meaningful fashion. A close above the 20-DMA would turn this market around, but again the upside could well be limited by the 200-DMA.

The hourly chart sees Brent struggling to hold above the 200-hour MA, but it is certainly a more impressive performance. The drop-back from the overnight highs removes the overbought element, giving Brent room to move higher.

WTI finds support at $96.50

Plentiful supply has been a major downward force in WTI, and this also meant that the move higher has been less dramatic here. The highs of earlier in the week have not been challenged, and the turn higher in the daily RSI has been less dramatic as well.

Tuesday’s highs of $98.60 need to be broken for this upward move to be sustained, while on the hourly chart the 200-hour MA has yet to be breached.

The $96.50 remains support on the downside, with further support likely around $95.70.

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