Levels to watch: gold, silver and crude

Deflation remains the overriding theme pushing commodities lower.

A man near an oil pump
Source: Bloomberg

Gold backs off the highs

Gold prices have chopped lower, backing off the $1,238 high on Tuesday to its current price of $1,224. This came following a spate of buying activity on the back of a continuation in the bear market in commodities, which has exacerbated global deflationary fears and in turn has seen a heightened demand for safe-haven assets such as gold.

Downside risk ranges are at $1,215 which has acted as support, and should it continue to do so the next clear area of topside resistance presents itself at $1,242. However, if the short-term rally reverses through $1,215 then a retest of $1,208 is likely to be seen.

Silver remains muted

Silver prices remain in a week-long consolidation pattern, with an immediate downside risk range of $17.11 continuing to hold following a close above during the London open session. Should a break above the topside resistance consolidation be seen, which at present is at $17.20, then the next clear area of resistance to the topside is at $17.70.

Brent prices continue to be depressed

Brent prices posted a fresh multi-year low of $63.04 in pre-London market trading, breaking below what had acted as an area of short-term resistance at $63.53. Should a close be seen on an intra-day timeframe, it could signal a further decline to $62.

WTI remains without support

WTI prices broke below a key technical area of support at $59.89, which could result in a significant move lower with the next clear area of resistance not being seen until the $53.96 level. If the aforementioned level continues to act as support, it will likely be retested over the near term, owing to an oversold reading on the relative strength index of 27.

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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.