Technical analysis: key levels for gold, silver and crude

Oil has managed to eke out further gains this morning, while the inability of silver to rally was demonstrated yet again as it finished yesterday’s session close to the day lows despite a jump higher during the day.

Gold bars
Source: Bloomberg

Gold could find support at $1275

Gold might be argued to be in an uptrend from the December 2013 lows, but it is certainly not moving up in a straight line. Crises in the Ukraine and weak eurozone growth are providing some rationale for holding on to the ‘barbarous relic’, but its refusal to go above $1290 shows how limited the upward momentum really is.

For now the 200-day moving average is propping up the market this morning, with further support to be found in the direction of $1275. On the upside the $1290 area must be breached, followed by a move through the 100-DMA around $1295. However, a decline in the daily relative strength index underscores the point that gold is struggling to make real headway.

Silver below 200-H MA

Although it has managed to break through the downtrend from $21.50, the fact that silver finished so close to its lows yesterday sends a negative signal. The $19.50 level is still holding as resistance, and silver is demonstrating a severe aversion to going anywhere near $20. On the downside, $19.30-$19.40 is still support.

The hourly chart shows the price back below the 200-hour moving average, with a declining intraday RSI, so the downside scenario prevails and suggests another possible retest of the $19.40 area.

Brent could be on positive rise

So far Brent is managing to gain ground in the direction of $103 this morning, but until this is breached caution will prevail. Even if it does succeed in this then it needs to clear the 20-DMA, which has provided a clear demarcation of the downward trend so far. Still, the upward move from $101 continues, while the fact that the RSI has managed to record further gains along with other indicators such as the moving average convergence/divergence, suggests this rise has legs.

WTI overbought on hourly chart

Having cleared $95 this morning the rally in WTI is still intact, but as with its Brent counterpart the commodity now needs to breach the 20-DMA around $95.50, with $95.20 before that being the top of the small gap from earlier in August. On the hourly chart the commodity is now overbought once again, so while it is above the 50- and 200-hour MAs there may well be some reluctance to see further gains heading into the weekend and the US Labor Day holiday.

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