Levels to watch: gold, silver and crude

The pain goes on in commodity markets, as red numbers flash up across the board. China worries are playing a big part, especially with a manufacturing PMI on the calendar for the week. 

A truck at a mine
Source: Bloomberg

Those who thought the end of last week might see an end to the dire performance of the sector have been sorely disappointed. Risk appetite is in short supply once again, with the US dollar and Treasury safe havens popular. With uncertainty about Chinese growth driving risk appetite at present tomorrow’s HSBC China manufacturing PMI reading will be crucial – last month’s reading was only just in expansion territory and any weakness could signal yet another route in raw materials.

Gold heavily oversold

A weekly chart here shows how strong the $1200 level is, with two tests of this area in 2013 seeing buyers step in.

The metal is now heavily oversold, which may provide room for a bounce, but gold will need to clear $1220 and then $1240 to mark a real turnaround.

On the downside traders should watch out for $1200 and then $1190.

20-DMA capping silver gains

The $17.45 level could be big support for silver, having seen buyers step in around here during 2010, but as with gold the oversold condition on the relative strength index may prompt some buyers to step in.

Significant resistance might be found around $18.40 should silver decide the time for a bounce has come, while the 20-day moving average around $18.90 should also act as the big barrier to additional gains.

The hourly chart continues to show a lot of barriers around $17.75, while any drop lower still targets the overnight low around $17.43.

Brent RSI moving higher

The $97.40 level is still holding as support for this commodity, but gains should be limited to the $99 area.

The RSI has begun to move higher on a daily basis, but for the time being there seems little that can drive the price upwards. Any drop below $97.40 targets $95.50.

WTI unable to push higher

US light crude continues to hold above $91.50, but as price action from last week shows there is little desire to push the commodity higher for the time being.

The first target is still a close above the 20-DMA at $93.45, and then on to $94.60.

Any drop through $91.50 targets $89.35.

IGA, may distribute information/research produced by its respective foreign marketing partners 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.