Levels to watch: gold, silver and crude

Commodities are looking like they are about to begin another move lower, as dollar strength starts to take hold once again.

Gold bars
Source: Bloomberg

It’s a long way back to the top for commodities, or even to the high levels seen at the beginning of this year. Commodity index trackers are a handy proxy here, with one ETF now at levels not seen since the second half of 2010. Not since mid-2012 have we seen such a steep decline in commodity prices, and with the US dollar still the place to be it looks like the losses are set to continue.

Gold could find resistance at $1180

We are seeing yet another oversold bounce in gold this morning, a course of events that is to be expected given the magnitude of the move downwards over the course of the last week.

First resistance is likely around $1180, and then on to $1200. Meanwhile, a drop lower would hit the lower end of support around $1150 and below this on to $1080.

Silver could return to $15.20

Silver has recovered the $16.00 level this morning as it goes through its oversold bounce. However, even a sustained rally from this point takes us back to $16.90 and then July downtrend, still unbroken despite a number of efforts over the past 12 weeks.

Further losses will take us in the direction of $15.20, the 2010 lows, with a stronger dollar being the primary driver here.

Brent targets $83

Dips towards $82 have been bought this morning so $83 is the first target as the commodity works off its oversold condition on the intraday relative strength index. The $83.60 level is the next area of potential resistance, while a fall below $82 puts us on course to $80.60.

WTI likely heading for 2011 lows

It is but a short hop to the 2011 lows here for WTI, around $75, and it seems almost certain that we will see this in coming weeks, even allowing for a bounce in the short term towards $79.50 and then to $80.10. 

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.