Technical analysis: key levels for gold, silver and crude

Commodities are under pressure across the board this morning, with gold and silver dropping back and oil seeing selling, despite a broad risk-on mode in European equities.

Crude oil processor
Source: Bloomberg

This year was supposed to be a good period for commodities, but the promise of the first half has not been replicated so far in the second half. In part, the move is due to the continuing attractiveness of the US dollar, which has been given a further bid thanks to the expectations surrounding the possible actions of the European Central Bank.

Even after its recent gains, the spectre of increasing supply means that oil will struggle to maintain its upward momentum. With reports coming in of fresh rises in output in the US, the supply picture continues to paint a bearish picture for oil.

Gold tests area below $1270

Gold is fighting to hold above $1270, but it has already tested the area below this level. If it does not hold then $1255 could be possible support, followed by $1253 and then down to $1240.

The $1285 level, around the 200-day moving average, and then $1290 are resistance levels, with a close above the latter needed to see any real upside.

Silver heading towards $19.04

Silver is now back below the trendline running from the July highs, heading towards support around $19.04. Beyond that, $18.78 is potential support, and $18.72 is a major area of support running back to December of last year.

Leaving aside the trendline, $19.50 has proved to be significant resistance so a close above here is needed if silver is to rally.

Brent tests $102 level

A resurgent US dollar has sent oil tumbling today, with Brent testing the $102 level for the first time in over a week.

If this level is lost then the lows around $101 come back into focus.

The 20-DMA continues to act as resistance, around $103.13, so a close through here is needed for a rally to continue. A declining daily relative strength index points to the dominance of the downside scenario.

WTI could see further losses

WTI’s rally from the August lows has been stumped just shy of $96, with the price testing the 20-DMA again. A drop back opens the way to another test of the Aug 17/18 gap, with the bottom end around $94.86 coming into focus.

Further losses would point towards the $94 level, while the $95.85 is now resistance on the upside.

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