Technical analysis: key levels for gold, silver and crude

Commodities have been hit this morning by a stronger US dollar, seeing losses across the board.

Silver bars
Source: Bloomberg

Gold rally runs out of steam

Gold’s rally has stalled just below $1320, and I suspect that the drift lower has begun in earnest this morning. The metal has dipped out of overbought territory, and a breach of the 100-day moving average suggests that $1280 is the next destination.

And so we find ourselves back in the April/May range of $1280-$1320, as the latest gold surge runs out of steam.

Recent lows around $1310 are holding up the market at present, but only a close above $1327 would put the bias back towards the longs.

Silver’s gains capped by $21 level

A similar story prevails here too, with the $21 level yet again capping gains for the white metal. Even if we did see a break to the upside, the daily chart shows resistance around $21.50 and then at the February high of $21.96.

Silver and gold usually move broadly in tandem, so a drop for gold will bring silver lower too. The loss of the 100-hour moving average suggests we will see a test of the 200-hour MA around $20.40 and then the March support of $19.77.

Brent looking to hold above $113.25

Oil continues to drop back from its overbought condition, and $115 is clearly the peak for now.

For Brent, the price has to hold above the 25 June low of $113.25 if it is to rally back towards $115. If this does not occur, then the $112.14 region, which saw a bounce on 17 June, is the next area of support. Elevated tensions surrounding the Iraq situation should continue to support the price however.

US light crude continues to move higher

NYMEX continues to move higher along the 2014 trendline, which has supported the market since the beginning of the year. It has slipped back below $107 on profit-taking, but the rising support around $105.50 could well see the buyers step in again.

Even if the price did drop below the trendline, as happened during May and the first part of June, the 50-DMA (currently at $103.33) should provide support again. The default picture here is more clearly bullish than in Brent, as pre-existing factors are supporting the market and the move higher is not just down to the Iraq situation.

A clearance of $108 should signal another attempt to breach the September 2013 high around $110.54.

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