Technical analysis: key levels for gold, silver and crude

Gold and silver may be losing their battle to stay at current levels, but NYMEX seems to be in the process of rallying.

Gold bars
Source: Bloomberg

Gold fails to hold above 20-DMA

Although off the lows, another drift down for gold today seems to suggest that the buying pressure here is fast disappearing.

On a daily chart the momentum indicators, chiefly the relative strength index, are heading lower, and the failure to hold above the 20-day moving average is a crucial sign that the short-term trend is down.

If $1300 is broken then the 200-DMA at $1286 comes into play, with the potential for some support around the 50-DMA at $1294.

Silver fails to break through $21

Successive attempts to break through $21 by silver have been defeated, putting the emphasis on the downside. If we see a break of the $20.70 zone then the next stop would likely be the 200-DMA around $20.30.

As before, the key hope for silver is the four-hour chart, where the 200-period moving average is still rising and acting as upward, sloping support. Currently at $20.60, a bounce here would set the stage for another attempt to push through $21. Only this would signal another attempt to reach $21.50, the high for the month.

Brent could find support at $107

Brent crude is struggling to maintain yesterday’s close above the $108 level, and any failure to achieve this would send a signal that another move to $107 is on the cards. Rising momentum indicators suggest that some sort of floor may be forming at $107, but I will remain sceptical of any move higher until it clears the 200-DMA and can push firmly in the direction of $110.

NYMEX eyes $102 level

A turn higher in the moving average convergence/divergence means that this indicator has now joined the RSI and stochastics in indicating the move higher for NYMEX, from $102, may have some legs to it.

Even so, I would be cautious and wait until the 50-DMA is breached and the 2014 uptrend is recovered. On the downside, $100 continues to be the ‘big level’ psychological support that will hold this market up.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.