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.
Gold fails to hold above 20-DMA
Although off the lows, another drift down for gold today seems to suggest that the buying pressure here is fast disappearing.
On a daily chart the momentum indicators, chiefly the relative strength index, are heading lower, and the failure to hold above the 20-day moving average is a crucial sign that the short-term trend is down.
If $1300 is broken then the 200-DMA at $1286 comes into play, with the potential for some support around the 50-DMA at $1294.
Silver fails to break through $21
Successive attempts to break through $21 by silver have been defeated, putting the emphasis on the downside. If we see a break of the $20.70 zone then the next stop would likely be the 200-DMA around $20.30.
As before, the key hope for silver is the four-hour chart, where the 200-period moving average is still rising and acting as upward, sloping support. Currently at $20.60, a bounce here would set the stage for another attempt to push through $21. Only this would signal another attempt to reach $21.50, the high for the month.
Brent could find support at $107
Brent crude is struggling to maintain yesterday’s close above the $108 level, and any failure to achieve this would send a signal that another move to $107 is on the cards. Rising momentum indicators suggest that some sort of floor may be forming at $107, but I will remain sceptical of any move higher until it clears the 200-DMA and can push firmly in the direction of $110.
NYMEX eyes $102 level
A turn higher in the moving average convergence/divergence means that this indicator has now joined the RSI and stochastics in indicating the move higher for NYMEX, from $102, may have some legs to it.
Even so, I would be cautious and wait until the 50-DMA is breached and the 2014 uptrend is recovered. On the downside, $100 continues to be the ‘big level’ psychological support that will hold this market up.