Nevertheless, with the dollar basket finding support at $81.40 and looking set to retest the recent highs, it is at the expense of the commodity suite; notably gold and oil.
Many would point to the supply glut for the decline in oil prices and this is certainly a factor, yet it would seem that the reason for the moves lower in oil is also demand based; the lack of global growth is a pertinent factor.
Tomorrow sees the release of US CPI, which is not expected to herald many surprises with a rise of 0.1% month-on-month expected. Given how gold has not really seen a great deal of upside in the wake of geopolitical tensions, inflation concerns are unlikely to awaken in the near term.
Gold beneath $1300 level
Having bounced off the 200-day moving average last week, gold has once again retreated beneath the $1300 per oz marker today and may look to revert to the mean yet again. Key support is at the $1293 level and the rising trendline support from the early June lows. Support under that comes from $1285.
The $1305 level which acted as support last week now reverts to resistance, so in the absence of any surprises we may be looking at a range bound trade for the time being.
Silver losing support
Silver remains well and truly ruled by the 200-DMA and has even lost the fight with the 100-DMA. Support is being whittled out at the $19.50 level and the rising RSI tends to indicate that we may see a small bounce higher – the middle of last Friday’s range may be a target – around $19.75. Any moves through $19.48 take us back towards $19.
Brent could see small retracement
Brent is taking a trip lower today having breached support at $104bbl last week, and the downside looks almost certain to prevail. There is little standing in the way between current price action ($101.60), assuming a daily close below $101.80 and the $99.70 near-term support zone, so we may see a small retracement towards $102.44 prior to another leg lower. This is supported by the positive divergence on the daily RSI which is not yet oversold.
WTI could head towards $92
WTI is most definitely looking oversold from a daily perspective and while we may see a small bounce, one would expect that the $95.10 level (76.4% retracement) from the 2014 lows to highs will keep any bullishness in check. An additional push down through $93.60 targets the early $92 level.