Levels to watch: gold, silver and crude

Silver’s decline is finally beginning to affect gold, as the yellow metal fails to hold above $1250. Meanwhile oil is being knocked back yet again, as risk sentiment undergoes another wobble. 

Gold bullion
Source: Bloomberg

Gold fails to move past $1250

I had always been sceptical of gold’s apparent ability to move beyond the $1250 mark. Now the 50-day moving average has done its work and the price is back below $1240 once more.

Momentum indicators such as the RSI are moving lower on a daily basis, with a first downside target being $1225 and then $1215. Any further drops would then begin to point towards a challenge of the $1200 level and then the October lows at $1186.

On the hourly chart, gold is moving below the 200-hour MA for the first time since the first week of October, breaking its steady uptrend. Now the short-term targets lie around $1233 and then $1223.

Silver tests previous lows

Silver is now testing the lows seen on 15 October, around $17.10 and, at the time of writing, is testing the water to see whether it can continue its downward progress. While there may be some support around $17, the next major area is likely to be $16.90.

Gains to the upside are still likely to be capped by the 20-DMA at $17.30 and then the long-term downtrend, around $17.35.

Brent no longer oversold

Brent’s move today has taken the commodity out of the oversold zone, thanks to news that Saudi Arabia may have cut production in September. For the moment the hourly chart shows a degree of support around the $84 zone, with the price testing the 200-hour moving average for the second time in two days. So far the indicator has held as resistance but even a break above would still have to clear the highs from yesterday around the $87 mark.

WTI sees renewed support at $80

Once again the $80 level has held as support for US light crude, although the jump higher has taken it to the 50-hour moving average, far short of the test of the 200-hour that was seen yesterday. If the price does move higher then the first target will be yesterday’s peak around $83. 

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