Levels to watch: gold, silver and crude

The steady appreciation of the US dollar continues to weigh on commodity prices, with silver dropping below $19 again and Brent crude getting used to trading below $100.

A gold mine
Source: Bloomberg

The dollar index is moving back to levels not seen since the middle of last year, buoyed by the US economic recovery and given a further lift by the apparently more dovish stances of the European Central Bank and Bank of Japan. Commodity prices have not managed to lift themselves out of their current doldrums, and with the Ukraine still quiet there is little impetus to move back into precious metals.

Gold still moving lower

Some support might be found around the $1251 level as gold continues its move lower, but a break through here targets the early June lows around $1240.

Any rally targets $1270 as a first zone of potential resistance.

Silver nearing oversold territory

Yet again silver is holding above the $19 level, after dipping through it yesterday. Unlike gold, silver is pressing into oversold territory, providing the rationale for a possible short-term bounce. Any gains should be capped by the $19.21 area, and even if this is broken the commodity must still break the 20-day moving average around $19.41.

Brent could fall to $98.70

Yesterday’s low of $99.30 should be watched carefully, since below here Brent will target $98.70 and then the 2013 low around $96.70.

The hourly chart sees the price struggling to break above the 20-hour MA, with the psychological $100 level remaining important. An immediate target on the upside would be $100.50, or the 50-hour MA at $100.58.

WTI close to crucial support

WTI is close to crucial support around the $92 level, and while it holds above this area (currently at $93.15), there is hope for some upside.

The daily relative strength index is keeping out of oversold territory, but has yet to turn higher, which will cause most traders to wait before going long in the short term.

For the time being the target on the upside is $93.50, with the price attempting to break through the 50-hour MA at the time of writing. 

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa 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. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.