Levels to watch: gold, silver and crude

A rising dollar continues to make life difficult for commodities, as gold approaches key support.

Gold
Source: Bloomberg

Gold resumes its downward move                      
The metal remains in retreat, thanks to the rising dollar. Key support at $1170 was tested yesterday, but downward progress resumed today. A daily close below here would target the June lows around $1162.

Any further declines would see gold heading towards the crucial $1140 level, the lows of mid-March. Until daily stochastics turn bullish, which does not look likely at present, I remain of the view that the downside case will prevail.

Silver heading back toward March lows
It looks as if we will see further downside in silver, assuming that a daily close below $15.80 is seen. Daily stochastics have turned bearish, so I am watching for a move back towards the March lows at $15.50.

Any bounce needs to clear above $16.20, but the loss of the rising March trendline earlier this week suggests that this is a distant prospect.

Brent crude looks set to tumble
In retreating from the highs of the week, it looks like we will see more downside for this commodity. Key support is to be around $61.50, but if this is lost then there is little to hold it until it reaches $55. A bounce will need to clear the 50-day simple moving average at $64, and then on to the 200-day SMA at $67.27.

WTI more likely to break lower
US light crude actually encountered the 200-day SMA ($61.54) yesterday, but we should not assume that a break higher is on its way. Indeed, while the rising 50-day SMA ($59.10) continues to offer support, a turn lower in daily stochastics and the relative strength index supports the idea that we will see a break lower towards $57.50. 

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