Technical analysis: key levels for gold, silver and crude

The strength of the dollar, ahead of the conference in Jackson Hole later this week, may be without reason, particularly since nobody really expects a hawkish Janet Yellen.

Gold bars
Source: Bloomberg

Nevertheless, with the dollar basket finding support at $81.40 and looking set to retest the recent highs, it is at the expense of the commodity suite; notably gold and oil.

Many would point to the supply glut for the decline in oil prices and this is certainly a factor, yet it would seem that the reason for the moves lower in oil is also demand based; the lack of global growth is a pertinent factor.

Tomorrow sees the release of US CPI, which is not expected to herald many surprises with a rise of 0.1% month-on-month expected. Given how gold has not really seen a great deal of upside in the wake of geopolitical tensions, inflation concerns are unlikely to awaken in the near term.

Gold beneath $1300 level

Having bounced off the 200-day moving average last week, gold has once again retreated beneath the $1300 per oz marker today and may look to revert to the mean yet again. Key support is at the $1293 level and the rising trendline support from the early June lows. Support under that comes from $1285.

The $1305 level which acted as support last week now reverts to resistance, so in the absence of any surprises we may be looking at a range bound trade for the time being.

Silver losing support

Silver remains well and truly ruled by the 200-DMA and has even lost the fight with the 100-DMA. Support is being whittled out at the $19.50 level and the rising RSI tends to indicate that we may see a small bounce higher – the middle of last Friday’s range may be a target – around $19.75. Any moves through $19.48 take us back towards $19.

Brent could see small retracement

Brent is taking a trip lower today having breached support at $104bbl last week, and the downside looks almost certain to prevail. There is little standing in the way between current price action ($101.60), assuming a daily close below $101.80 and the $99.70 near-term support zone, so we may see a small retracement towards $102.44 prior to another leg lower. This is supported by the positive divergence on the daily RSI which is not yet oversold.

WTI could head towards $92

WTI is most definitely looking oversold from a daily perspective and while we may see a small bounce, one would expect that the $95.10 level (76.4% retracement) from the 2014 lows to highs will keep any bullishness in check. An additional push down through $93.60 targets the early $92 level.

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