Technical analysis: key levels for gold, silver and crude

Commodities have turned lower this morning as markets struggle to establish a clear direction in the wake of growing political uncertainty and ahead of some major data this week.

Silver bars
Source: Bloomberg

Gold bugs await metal's next move

Gold enjoyed a decent bounce on Friday off the 50-day moving average, but the rally halted around the $1307 level and we are witnessing a drop back from here this morning.

As usual, round numbers come into play here, with $1300 still being the one to watch. On a daily chart the 100-DMA is providing useful support, but we need a close above the 20-DMA to suggest the short-term direction has changed. A continually declining daily relative strength index shows that there is as yet little momentum for gold in this timeframe.

On the hourly chart, the positive momentum that sustained the move through Friday has come to an end, with the metal dropping below the 200-hour MA. Thus, we wait to see whether gold has more strength to break through $1307 or drop back through $1300. Either move would signal a significant development.

Silver eyes $21.50

A resolute bounce off the 200-DMA has seen silver stabilise once again, and eager silver fans will be waiting for the 50-DMA to cross above the 200-DMA, a clear bullish sign.

With the daily RSI below 50 and other indicators such as moving average convergence/divergence also heading lower, there could be further downside back in the direction of the 200-DMA at $20.30. However, so long as the metal stays above this level the picture remains cautiously bullish.

On a four-hour chart the momentum indicators are pointing higher, even if silver is below the 200-period MA for the first time since the beginning of June. Any break to the upside still targets $21.50, while the 200-DMA around $20.30 acts as support on the downside.

Brent bouncing between $107 and $108

Brent’s bounce between the $107 and $108 levels is ongoing this morning, remaining within easy distance of the 200-DMA but seemingly unwilling to go any higher or lower. Yet, the daily RSI has clawed its way upwards and we may be witnessing the first positive crossover in the MACD since the beginning of July.

On an hourly chart the drop back from Friday’s level is clear, and now we wait to see if the dance around the 200-hour MA that has been going on since last week is set to continue. If it is, watch out for the usual buying if the intraday RSI becomes oversold.

NYMEX holds above $100

Indecision reigns in NYMEX at present but while the commodity holds above $100, the default scenario remains an expectation of further gains.

On a weekly chart, a rising trendline for crude could well provide the support for a bounce back towards $104, even if a continuing decline in the stochastic indicator muddies the waters.

The intraday picture remains uncertain, with a drop through the 200-hour MA being a pleasing coda to the three attempts by NYMEX to breach $103 over the past two weeks. The Friday low around $101 is one area to look for support, with any gains needing to clear $103 to indicate additional upside.

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