Levels to watch: gold, silver and crude

Markets return to a risk-off sentiment which is boosting the dollar and stocks while capping gains in commodities.

Oil pipework refinery
Source: Bloomberg

Gold loses its allure in risk-off market

Investors continue to unwind risk-off positions which has resulted in a continuing bullish trend in the dollar and a rebounding in global equities, both of which continue to take away from the allure of owning gold. At the London open on Thursday, gold prices are trading at $1,207.9 having met downside resistance at $1,206.5. This level must be broken in order to confirm a continuing bearish trend, which has seen the price fall 1.28% from its 6 January high of $1,223.

Further downside is supported by the relative strength index which is currently showing a reading of 41. Having already broken through its short-term 50-day moving average, the downside target now presents itself at the 100-DMA at $1,203.7.

Silver prints bullish higher-high

Silver prices have continued to chop higher on Thursday posting a lower-high at $16.36. The previous low of $16.30 will need to be held in order to confirm a bullish bias, which if achieved could see a retesting of upside targets at $16.45-$16.52.

However, should the previous low be taken out, a trend which is currently being supported by a contractionary reading in silver’s RSI of 39, then downside levels of $16.15 are likely to be seen.

Bounce in Brent likely to be short-lived

Brent prices bounced off multi-year lows of $49.66 on Wednesday, to its current level of $51.26 having posted an oversold level of 27 during Wednesday’s session. Topside support is currently trading at $52.26, which if held is likely to result in a retesting of further downside in which targets of $49.16 are likely to be seen.

WTI fails to break key topside level

WTI snapped back to a previous level of downside support at $49.39, which has subsequently seen the short-term bullish trend fail and reverse to its current level of $48.70. Should topside support continue to hold, a retesting of previous downside target at $46.72 is likely to be seen – a trend supported by a RSI reading of 46. 

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