Levels to watch: gold, silver and crude

Commodities left mixed following widespread support for the US dollar.

Oil barrels
Source: Bloomberg

Gold prices consolidate on USD strength

Gold prices have begun to consolidate to the downside at a key intermediate level of support of $1,186 with a consolidation range of $1,184 and $1,188. This gifts traders both near-term support/resistance levels before ascertaining a longer-term directional bias.

The recent widespread support for the dollar is likely to continue to weigh in on gold prices. Should a close be seen sub-$1,186 then the next key area of possible support is likely to manifest itself at $1,178 with the aforementioned area of support turning into resistance.

Silver reverses gains

Silver prices broke to the upside out of its recent consolidation pattern on 30 December touching a high of $16.47, but has since reversed to the downside with a recent low of $15.56 to its current trading level of $15.79. This suggests that the previous levels of consolidation at $16.29 and $15.60 are back in play, offering traders levels to watch before taking a longer-term directional view.

Are Brent prices poised to push higher?

Brent prices touched a recent low of $55.84 on 31 December, which has since seen prices rally back to a key level of topside intermediate resistance of $57.67, currently trading at $57.68. Should a close be seen above the aforementioned intermediate resistance then a re-testing of $59.88 could well be seen.

This is supported by an expansionary reading in Brent’s relative strength index indicator of 55.3. However, should topside resistance hold and the long-standing bearish trend resume, then a re-testing to the downside of $55.90 would become increasingly likely.

WTI fails to sustain bullish move

WTI prices have more or less mirrored the move in Brent prices, posting a lower-high of $53.26 off a recent low of $52.44 (31 December). However, the price has failed to sustain a bullish move above a key level of intermediate resistance at $53.96, and is currently trading at $53.60.

Should the aforementioned resistance level hold, then a re-testing of its recent low of $52.44 could well be seen. However, should WTI prices continue to track Brent then a close bar will need to be seen above $53.96 in order to increase confidence of a re-testing of $56.04.

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.