Levels to watch: gold, silver and crude

The stabilisation in commodity prices continues today, with gold recording a third successive day of gains, but pre-Federal Open Market Committee nerves are holding back advances.

Silver bars
Source: Bloomberg

The major US pension fund, Calpers, might be sticking with commodities, but serious questions remain about the asset class and its ability to perform in the coming quarter.

The across-the-board rout in the sector, and the prospect of yet more US dollar gains to come, mean that investors are switching back to defensive mode where this asset is concerned. Signs of Chinese stimulus yesterday provided some relief, as does the possibility that the FOMC statement will be more dovish than expected. However, the downside bias remains.

Gold could find support at $1226

Gold’s modest bounce from oversold territory continues, but $1240 should be significant resistance for the time being. Meanwhile, support should be found around $1226, and then around $1190. The hourly chart indicates that $1235 is also helping to support the price at present, but that attempts to break through $1240 have been defeated so far.

Silver targets 20-DMA

The $18.75 level is still resistance for silver in the short-term, and any break through here would target $19.10, around the 20-day moving average. Short-term support still lies around $18.50, but a close below here would target $18.22.

Brent could reach $100.95

Momentum indicators appear to be pointing towards further upside here, with a close above $100 suggesting we will see a move back to $100.95. Support for Brent continues to lie in the area of $97.55, the lows from last week, and then around $96.75.

WTI immediate target is $95.95

The spike above the 20-DMA is the first real positive sign for this market in weeks, although $94.65 is stymying progress for the time being. An immediate target is $95.95, and then the 50-DMA around $96.95. Downside support should continue to be found around $92. 

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