Levels to watch: gold, silver and crude

Precious metals look set for more gains, but oil looks to be coming under increasing pressure.

A miner at work
Source: Bloomberg

Gold price above 20-SMA

The steady move higher in gold is stalling this morning, but the price remains above the 20-simple moving average (SMA) and is supported by a clear bullish dimension to activity on the daily relative strength index (RSI) and stochastic indicators.

The rally may now extend itself in the direction of the 100-SMA, around $1208, even if further upside looks limited above this point. Gold’s rally has taken place in the context of short-term dollar weakness in an environment that should, in the longer-term, see more upside for the greenback.

50-DMA hinders silver

Friday’s silver bounce has run into the 50-day moving average (DMA) this morning, but overall the upward move does seem to have some more fight in it. A close above this indicator would signal a move towards the mid-February high around $17.50, and then on to the 200-DMA at $17.80.

The four-hour chart is still showing an overbought reading on the RSI, so those awaiting the chance to enter the trade should wait until this situation has been rectified or until the stochastic momentum index in this timeframe stages a fresh bullish crossover.

A close back below $16 would negate the bullish outlook here.

Brent RSI heading lower

Brent's failure to hold last week’s highs and a slip below the 50-DMA means that we are likely to see a new attempt to break to fresh multi-week lows.

The daily RSI is moving lower once more, while on the four-hour chart an attempt to break through the 50-period EMA has run its course. The $53.80 level and then $52.90 are the targets on the downside.

WTI to test $44

Two attempts last week to close above $47 have been rebuffed, and while $45 is short-term support, the likelihood is that $44 will also be tested. Daily stochastics have yet to turn lower, but this seems to be a distinct possibility. Only a close above the 50-DMA at $48.20 would turn this scenario on its head and give new life to WTI bulls.

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