Levels to watch: gold, silver and crude

Commodities are in retreat once again, and in particular it looks like the run in precious metals is coming to an end.

Gold bars
Source: Bloomberg

Gold could look to support at $1180

A close below $1200 could well be regarded as the turning point for the current rally in gold. Impressively, the metal went all the way to $1220 on Thursday, hitting the November uptrend line from below. Now however we can see the daily relative strength index (RSI) beginning to roll over, dropping back from yesterday’s highs, a sign that buying momentum is receding.

Although the stochastic momentum index is still in a bullish frame, a serious decline today would bring this into question and potentially indicate that a reversal is underway. In that case we look towards support at $1180 and then $1160.

Silver RSI leaves overbought zone

Unsurprisingly a similar picture is playing out in silver, where an attempt to move towards $17.50 was rebuffed yesterday.

A close back below $17 would continue the reversal, and as the daily RSI drops out of overbought territory and threatens to move below its 10-day simple moving average the bears seem to be gaining control. On the downside $16.60 is possible support, while the price must close above $17.10 to maintain the upward move.

Brent buyers still in control

Brent crude is in retreat today as news of Saudi airstrikes fades in importance for a time, but with steady-rising momentum indicators still pointing to more gains the buyers seem to have the upper hand, with the February highs around $62.60 now in focus.

It would take a firm close below yesterday’s lows around $56.40 to signal that the upward move has come to an end.

WTI eyes $51.80 level

An attempt to take out yesterday’s highs failed, which casts doubt on the ability of US light crude to move higher. However the momentum still lies to the upside, so another move upwards to try for a close above $51.80 cannot be ruled out. On the four-hour chart a rising trendline from the 17 March lows could see support enter around the $48.40 mark. 

IGA, may distribute information/research produced by its respective foreign affiliates 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.