Levels to watch: gold, silver and crude

Dovish tones from the Federal Open Market Committee have seen the dollar weaken to a degree and this has been to the benefit of base and precious metals. The same level of respite has yet to be felt in oil prices.

Gold ingots
Source: Bloomberg

$1180 level supporting Gold

The $1180 low on gold has been a prime area of support on several occasions now. So technical buying, along with the Federal Reserve message, has enabled prices in the precious metal to rise even further and we are now seeing gains for the fourth consecutive day. The $1230-4 level is important and we have tested it this morning already. If breached, the price of gold could rally up to test the 50-day moving average at $1258. While below here, the risk is for a move back towards $1215. Any moves back through $1180 on a daily close would result in a swift move to the downside.

Silver finds a base

Silver has also found a base around the $16.67/oz marker but looks likely to run out of steam at $17.60-70 – this is the falling trendline resistance from the highs seen all the way back in May 2011. A move through here would be rather bullish and would support a swift test of $18.00 in the short term.

The confluence of the three major MAs on the hourly chart should provide a semblance of support around $17.30. Below that lies $17.06.

Brent below $91.38

Oil prices have not felt the benefit of the weaker dollar and continue to languish in the doldrums. Brent is now trading below $91.38/bbl – we have not seen a weekly close through here since November 2010.

Weekly chart is looking very oversold but as long as prices remain below $91 then the $88.50 looks like a likely target. The 50-hour MA is the metric to watch as it continues to be a barrier to upside. A move back through $91.76 could see a squeeze higher towards $93.

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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.