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.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.