Levels to watch: gold, silver and crude

Commodities continue to suffer as deflation fundamentals remain unchanged.

Gold bars
Source: Bloomberg

Further near-term downside for gold

Gold prices continued to head lower on Monday, falling to a low of $1,191 before rebounding to its current level of $1,200, having touched a daily high of $1,203. This is subsequently the intermediate topside resistance, which could lead to a move to $1,209 if a close is seen through this level. However with a relative strength index (RSI) of 43 there’s likely to be some near-term downside, which could test an intermediate low of $1,195.

Choppy silver spikes lower

Silver prices dropped sharply to a two-week low of $16.07 in overnight markets on Tuesday, and have since begun to consolidate between $16.15 and $16.29, which will subsequently now act as an intermediate risk range. Having posted an oversold reading on its RSI, a short-term bounce could now be seen. If a move takes out the intermediate high, the next clear level of resistance is likely to be seen between $16.38-45. However, should a rally be short-lived and a close be seen sub-$16.15, the next likely area of consolidation doesn’t appear until $15.85.

No end in sight for Brent

There’s no resolve for Brent prices, which continue to post fresh-low’s with the latest posting $59.14 during Tuesday’s opening session. Without any change to the fundamental landscape surrounding the commodity producing nations, not to mention bearish comments from prominent OPEC members, there’s no change to the bearish call in Brent prices. The intermediate downside risk range therefore remains unchanged at $56.26, with topside support moving lower to $60.74.

Further downside set for WTI

Unlike Brent, WTI has reached a previous intermediate downside risk level of $53.96, which, coupled with an oversold reading in its RSI indicator, should signal a short-term bounce. However, as with Brent, the fundamentals continue to lead technical and remain unrelentingly bearish.

Intermediate risk ranges for WTI at the topside have moved lower to $55.30, whereas should a close be seen below $53.96 then a further downside move to $53.19 and then $51.70 could be seen. 

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