Levels to watch: gold, silver and crude

A strong US jobless claims number bolsters hopes of a tightening in US monetary policy, weighing on safe-haven assets.

Oil poured into a barrel
Source: Bloomberg

Gold poised to pounce ahead of key US data

Gold prices are trading at $1,264, adding 0.21%, as markets support safe-havens higher ahead of today’s ADP non-farm employment change data from the US – which is expected to show a decline to 225k, down from its previous level of 241k month on month.

Should market expectations be met then gold is likely to go in search of the $1,270 level where both its 50- and 100-hour moving averages have begun to converge, pointing to an area of solid resistance.

If topside resistance fails then the next clear target is likely placed at $1,277. However, in order to support a bullish bias, downside support will need to be seen at $1,263.

A failure to hold downside support, and if today’s ADP data beats expectations, may see the dollar move higher and weigh on gold prices, possibly resulting in a move lower to previous support last seen at $1,251 – a move currently being supported by a contractionary reading in its relative strength index (RSI) of 44.

Silver edges higher

Silver is up 0.17%, currently trading at $17.32 having backed off its Tuesday highs of $17.75 – a move capped by the 200-hour MA at $1,765 and likely to remain as topside resistance.

Wednesday’s release of the US ADP employment change is likely to have a heavy impact on the directional bias of silver, and should the data miss expectations we could see $17.65 retested. However, if silver’s 100-hour MA ($17.22), which is currently acting as key downside support, fail to hold then the next clear downside level presents itself at $17.11.

Brent backs off its recent highs

Brent prices are trading at $56.79, down 0.31%, having posted a top at $58.99 yesterday following supply issues caused by the workers’ strike across US oil refineries.

However, with the current oversupply issue resulting from OPEC’s unwillingness to curb supply in the wake of declining demand, it is likely that the effects of a short-term supply-chain disruption will be short-lived.

A resumption of the previous bearish trend could see the next clear downside level of support at the 50-hour MA ($55.52) – a level, which if broken, that could bring $54.70 into play. However, if downside support holds then it is likely a retest of $57.45 will be seen.

WTI searching for support

WTI is trading at $51.21, down 1.25%, following a sharp move higher on Monday that saw prices climb from $44.35 to a recent high of $54.24. This has subsequently resulted in an overbought reading of 82 in its RSI, which explains the more recent pull-back that has found support at $51.28.

A push higher to $53.16 could be seen if support holds. Though, given the fundamentals remain unchanged in regards to an oversupply issue, it is not likely that a move higher will be sustained.

The next clear downside projection is placed at $49.39 should support fail to hold. If this is broken we could see price action go in search of support at the 50-hour MA currently at $48.17.

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