Levels to watch: gold, silver and crude

World Bank cuts global growth forecasts for 2015, weighing on oil prices.

Gold bars
Source: Bloomberg

Gold still in vogue despite recent pull-back

Gold prices are currently trading at $1,227, down 0.45% after posting a top of $1,244. This came amid heightened demand for the precious metal following continued risk aversion by the markets as uncertainty regarding global growth increased. This saw the World Bank cut forecasts to 3% from 3.4% in 2015.

Price action in gold failed to rally through the 200-day moving average at $1,245, which remains a significant point of topside resistance. However, today’s pull-back is still supported by gold’s relative strength index, currently trading at 60, suggesting a possible retest of upside resistance. If this broken we could see a move higher to $1,250, and while short-term support has been seen at $1,225 a break below could lead the way to $1,212.

Silver retraces sharply

Silver prices opened lower on Wednesday, currently trading down 2.68% at $16.60, falling back below $16.62 – a long-standing area of consolidation, in a move supported lower by a reading of 35 in its RSI and suggesting further downside could be in store. Should the bearish move continue, the next clear downside target appears to be at $16.52, which if broken could see a fall to $16.45. With demand for precious metals set to increase on the back of global uncertainty, if the bulls step back into the market, silver could retest $16.74.

Global slowdown still weighing on Brent prices

Brent prices failed to break above an intermediate area of topside resistance at $48.19, which has resulted in a move lower to its current level of $47.30. It is down -1.22% on the day after the forecasted slowdown in global growth. Following this the World Bank cut its growth estimates by 0.4% to 3% for 2015.

Any upside in Brent prices is likely to be capped by its 50-period moving average, currently trading at $48.16. If this is broken we could see a retest of $48.80. However, should further downside prevail, which is currently supported by a bearish reading of 47 in Brent’s RSI, then the next clear level of downside support is seen at $45.21.

Unchanged fundamentals leave WTI susceptible to further downside

WTI is down -0.91% after touching a high of $46.76 on Tuesday and is currently trading at $45.56. With no significant turnaround in global demand relative to the surplus supply in oil, price action remains bearish. This is supported by a reading of 44.2 in its RSI.

Intermediate downside support in WTI is placed at Tuesday’s low of $44.35, and if broken we could see a fresh low of $43.30. However, if support is found, a retest of $46.72 could be seen with further upside targets at $47.01.

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