Levels to watch: gold, silver and crude

There is a second day of disconnect in markets, as Monday’s weak equity/strong commodity story is reversed. Oil has seen the sellers come back in again while gold has failed so far to hold on to the $1200 level, in a tedious repeat of last week’s price action.

Gold bearings
Source: Bloomberg

$1180 supporting gold

The question that will be asked this morning is whether yesterday’s bottom at $1150 was the end of gold’s declines, or whether the top at $1220 was the peak for now.

For the moment, the latter view seems to hold sway. At the time of writing the metal is failing to keep above the $1200 level, though it is discovering a measure of support around the 200-hour MA at $1193. A failure to hold above yesterday’s close at $1206 would send a signal that weakness prevails in this market, with that view strengthened if gold endures yet another close below the 50-day moving average.

As yesterday $1180 is still big support for any move lower, while we continue to wait for an indication that gold wishes to retest the Monday peak at $1220.

Silver indecisive

Yesterday’s outside day in silver price action has given way to limited downside, but there is little appetite to head back towards $16.70.

The apparent indecisiveness of silver’s move today makes a person long for the days when it simply followed the July trendline lower, and while the price does sit above the trendline for now it does not yet seem to have a strong hold on the situation.

As ever, a close below the $16 level would be a sign that the situation has shifted back to a more bearish view, with downside targets at $15.50 and then $15. Meanwhile, a clear breakout above $16.70 puts the full focus of the effort back on a rally towards $17.50, the October high that proved such a barrier.

Brent meets resistance at $73

After yesterday’s bounce Brent prices are in retreat once again. The hourly chart shows that $73 is proving to be resistance, in a similar fashion to yesterday and last Friday. Without a clear move through $73 the likelihood is that we’ll see a move lower once more, potentially testing the low seen on Monday morning around $68.

WTI runs out of steam

A similar story applies in US light crude, which has run out of steam around $69.50. A drift lower appears to have begun, with a first area of support around the 50-hour at $67.50 and then onwards to Monday’s low at $64 itself. 

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.