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.
It’s a long way back to the top for commodities, or even to the high levels seen at the beginning of this year. Commodity index trackers are a handy proxy here, with one ETF now at levels not seen since the second half of 2010. Not since mid-2012 have we seen such a steep decline in commodity prices, and with the US dollar still the place to be it looks like the losses are set to continue.
Gold could find resistance at $1180
We are seeing yet another oversold bounce in gold this morning, a course of events that is to be expected given the magnitude of the move downwards over the course of the last week.
First resistance is likely around $1180, and then on to $1200. Meanwhile, a drop lower would hit the lower end of support around $1150 and below this on to $1080.
Silver could return to $15.20
Silver has recovered the $16.00 level this morning as it goes through its oversold bounce. However, even a sustained rally from this point takes us back to $16.90 and then July downtrend, still unbroken despite a number of efforts over the past 12 weeks.
Further losses will take us in the direction of $15.20, the 2010 lows, with a stronger dollar being the primary driver here.
Brent targets $83
Dips towards $82 have been bought this morning so $83 is the first target as the commodity works off its oversold condition on the intraday relative strength index. The $83.60 level is the next area of potential resistance, while a fall below $82 puts us on course to $80.60.
WTI likely heading for 2011 lows
It is but a short hop to the 2011 lows here for WTI, around $75, and it seems almost certain that we will see this in coming weeks, even allowing for a bounce in the short term towards $79.50 and then to $80.10.