Levels to watch: gold, silver and crude

For once commodity prices are all moving in one direction, and that direction isn’t up. Gold has returned to $1200 and even oil prices have found some buyers.

Silver bars
Source: Bloomberg

Gold bulls have upper hand

The rally has carried us all the way back to $1200, a level some thought we might not see again for a long time. Gold’s move higher takes us back inside the descending channel that has predominated all year. A continuation of the rally would point towards gains in the direction of $1240 and then even $1280, assuming that the metal can clear the 50-day moving average around $1210.

For now the 2013 lows at $1180 are first-line support, while below that lies the 2014 lows of $1150. With the daily relative strength index surging above 50 it seems gold bulls have the upper hand for now.

Silver eyes $17.10

A similar rally in silver has taken the metal from the depths of despair at $15 to the giddy heights of $16.35. This oversold bounce has carried us all the way back to the July downtrend, still yet to be broken. Now the question is whether history will repeat itself and send the metal back towards first support at $16 or whether silver can finally break the trend and challenge $16.70 and then $17.10.

An overbought hourly chart suggests we might see another short pullback towards the 50-hour MA at $16.10, with the 200-H MA at $15.70 being the next real support line.

Brent could clear 100-H MA

As Brent crude rebounds from the Friday low at $77, we wait to see if it can clear the 100-H MA and then today’s high at $80. If it is successful then the target becomes $81.30 and then $81.60.

At some point we need to see the price sustain a move towards $85 if this current bounce is going to be more than a climb from oversold levels before the next dive. At the moment $77 is still the first target on the downside.

WTI targets push above $76

US light crude is making further attempts to push above the $76 level that defined the limit of progress at the end of last week. So far the level is holding as resistance, although the dip this morning found support at the 50-H MA. If $76 is broken then the target becomes $76.75, followed on by the 200-H MA at $76.85. Even a break of this indicator however might only be short-lived, as we saw on 29 October and 10 November.

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