Levels to watch: gold, silver and crude

While precious metals mark time as they debate their next move, oil prices continue to feel the impact of bearish sentiment.

Silver bars
Source: Bloomberg

Gold eyes $1140

The metal continues to stabilise after its heavy losses, moving into consolidation mode. For the moment it is not clear whether this will resolve into a move up or down; I would regard a close back above $1110 as a bullish development, at least in the short-term, with a possible target back up towards $1140, the March lows.

If we resolve lower from the current range then the 24 July low at $1177 becomes the target, which would also encounter support from the monthly descending trendline around $1175. 

Gold chart

Silver could move above $15

Gold’s cheaper cousin however continues to be in a downtrend, even if buyers are still defending the $14.50 level with aplomb. Next support is to be found towards $14.40, the lows of 24 July, and then on towards $13.70.

The upside case would be invigorated by a move back above $15, but this would still leave it stuck in the longer-term downtrend, which would provide resistance around $15.35 for the metal

Silver chart

Brent could move to January lows

The break of $55 last week has intensified the downside here. Intraday rallies are becoming increasingly short-lived, but are still there to be sold. So far there is no sign of a turnaround here, and while there may be some support at $52.40, it looks like a move to the January lows is still on the cards for Brent.

Only a move back above $55 reverses this outlook.

Brent crude chart

WTI downside target around $45

For WTI, even the 20-hour EMA (currently $47.22) has been too much, with repeated attempts to move above this indicator defeated.

The move in this commodity has been a near-straight line, and downside targets still lie around $45 and below; only a bounce through and a close above the $50 level would stand even the remotest chance of providing a bullish catalyst, and even that would face the fundamental bearish drivers of rising supplies and weaker demand. 

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.