Levels to watch: gold, silver and crude

Dovish tones from the Federal Open Market Committee have seen the dollar weaken to a degree and this has been to the benefit of base and precious metals. The same level of respite has yet to be felt in oil prices.

Gold ingots
Source: Bloomberg

$1180 level supporting Gold

The $1180 low on gold has been a prime area of support on several occasions now. So technical buying, along with the Federal Reserve message, has enabled prices in the precious metal to rise even further and we are now seeing gains for the fourth consecutive day. The $1230-4 level is important and we have tested it this morning already. If breached, the price of gold could rally up to test the 50-day moving average at $1258. While below here, the risk is for a move back towards $1215. Any moves back through $1180 on a daily close would result in a swift move to the downside.

Silver finds a base

Silver has also found a base around the $16.67/oz marker but looks likely to run out of steam at $17.60-70 – this is the falling trendline resistance from the highs seen all the way back in May 2011. A move through here would be rather bullish and would support a swift test of $18.00 in the short term.

The confluence of the three major MAs on the hourly chart should provide a semblance of support around $17.30. Below that lies $17.06.

Brent below $91.38

Oil prices have not felt the benefit of the weaker dollar and continue to languish in the doldrums. Brent is now trading below $91.38/bbl – we have not seen a weekly close through here since November 2010.

Weekly chart is looking very oversold but as long as prices remain below $91 then the $88.50 looks like a likely target. The 50-hour MA is the metric to watch as it continues to be a barrier to upside. A move back through $91.76 could see a squeeze higher towards $93.

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.