Levels to watch: gold, silver and crude

Precious metals seeing highly volatile start to the morning, yet the signs that WTI could start to sell off is one of the more interesting things to watch for the day.

An oil pump
Source: Bloomberg

Gold back below $1178 and trending lower

Gold has been steadily trending lower this week, with clear lower highs and lows. However, yesterday saw the price fail to move below the week’s low of $1169 and the selloff so far this morning has also failed at that hurdle. This is an indication that possibly we are going to see the price consolidate between $1187 and $1169. As such, while the price remains above $1169, I am looking for a move higher with the first major resistance point coming at $1175.

Spot gold chart

Sharp move lower in silver fails to last as buyers come back in

The break below a consolidating channel overnight has led to significant losses for silver, yet the existence of two major support levels at $15.60 and $15.47 managed to bring the buyers back in very quickly. This hammer candle, if it closes in the green, actually looks very bullish and as such we could see further upside later into the session. However, the trendline resistance (currently $15.85) would have to be taken out first for a move towards $15.98. A failure to break above the trendline could lead to further losses.

Spot silver chart

Brent finds support and begins to show bullish signs amid selloff

Brent crude has found continued support upon the trendline from back in early May. This will be the key hurdle to any further downside today. With yesterday seeing the price burst to a new swing high and the MACD histogram beginning to turn, the warning signs are there for a possible strengthening of Brent. As such, should the price move above $63.96, I would see this as a bullish signal for another attempt to create a new high above $65.04. However, should the price break below $62.80, then I would be expecting another move back to the $62.12 support level.

Brent crude chart

WTI sells off from resistance, but creation of new low is a worry

WTI has sold off sharply from the key $61.57 resistance level. However, for the first time this month, we have seen a new lower low created, which is a bit of a warning sign. On the daily chart, the price has been followed perfectly by momentum, with the stochastic pattern matching that of the price. However, the stochastic has recently fallen away, which is a signal that perhaps the momentum behind this recent strength is coming off somewhat. Nevertheless, price action is king and as we stand, we are watching consolidation. Given the weakness in momentum, I would not be surprised to see weakness come into play, but I would only be bearish should the price break below $59.44. 

WTI chart

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.