Levels to watch: gold, silver and crude

Dollar bulls have re-entered the market, which is weighing in on commodity prices.

Gold bars
Source: Bloomberg

Gold on backfoot as dollar bulls return

Gold prices have lost 0.09% during Monday’s opening session in London, currently trading at $1,222.23 after posting a top of $1,231.29 in overnight markets. The reversal is likely to seek support at gold’s 50-day moving average, which is currently trading at $1,215.64.

The resumption of the dollar’s bullish trend is likely to see further downside for the yellow metal, which, if it breaks through the 50-day moving average, could see a move lower to $1,209. A expansionary reading in gold’s relative strength index remains intact, however, and, should the 50-day moving average result in resistance, a re-testing of $1,223 could be brought into play.

Silver attempts to breach key topside level

Silver is currently trading at $16.55, adding 0.29% at the London open on Monday. The precious metal rallied off an intermediate low of $16.25 on 9 January, moving up through its 50- ($16.44.4) and 100-day moving averages ($16.44.8), both of which are likely to offer support to silver bulls. If held, a third attempt to rally through a key topside area of resistance at $16.68 could be seen. Should bulls fail to push through this key level, then a re-testing of the aforementioned 50-day moving average at $16.44 is likely.

Further downside possible in Brent

As the dollar re-asserts its long-standing bullish trend, so too do the negative effects on Brent crude markets, with prices slipping 0.4% during Monday’s opening session in London, currently now trading at $49.94. The move lower in Brent has now moved below its 50-, 100- and 200-day moving averages, which are likely to act as topside resistance. They are capping any upside over the near-term, which, coupled with a reading of 42 in the relative strength index, signals a further move lower in which the next clear intermediate area of downside support is likely to be seen at Friday’s low of $48.90.

WTI reverses sharply

Having touched a high of $49.5 on Friday, WTI prices have opened sharply lower on Monday in London. They are now down 2.33%, trading at $47.24 following a strong showing of topside resistance at the 100-day moving average, currently trading at $48.48. This should continue to act as an intermediate topside area of resistance. Despite the sharp move lower, WTI’s RSI is trading at 37.8, suggesting further downside is still to come, with downside targets of $49.98.

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