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Gold breaks £1320
Gold performed a rapid turnaround yesterday and broke $1320, signaling the start of a breakout higher. The level to watch now is $1326, the high from April.
Gold bugs will be uncomfortably aware that the last test of this level saw a rapid drop to $1280. Any fall back at the moment may be halted by the $1310 level, the low from Monday.
A break of $1326 would signal a move to $1330 and then $1340, with a possible eventual target of the March high, around $1386.
Silver eyes March highs
The white metal is enjoying a breakout along with gold, and while temporarily stalled around $21.16, it is looking like a run to the March highs around $21.51 may be in order.
Silver is sharply oversold on a daily chart but a glance at the hourly shows this trend has been well-supported, with the 50-, 100- and 200-hour averages all pointing higher.
Any drop lower should be capped by the $20.77 level, the lows from last week.
Brent crude sees support at $112
Brent tested $112 during Monday, but it seems like support is gathering round here. However, there is as yet no clear sign that the bulls have the upper hand.
A drop back towards $111 may bring out more buyers, who are waiting for further weakness. Any upside would need to break $115, the June high, for a sign of a longer-term trend.
$105 holds well for US light crude
A close near the highs of the day is a strong sign here, as the $105 level has held well. The strength in evidence around $105 is a pointer to further gains in the direction of $107.50.
The trend in NYMEX remains resolutely upwards, but as before pullbacks will occur. These are still likely to be a ‘buy on weakness’ moment, however.
For the downside, we would need to see a drop through $105 and then a move towards the 50-day moving average around $104. Even then, the 100-day moving average has done an excellent job in providing entry points for longs, as seen in March and April.