The US dollar and Treasury yields have risen this week on changed expectations regarding US monetary policy. If the Federal Open Market Committee meeting next week does take a more hawkish turn then commodities could see further falls. However, given the magnitude of the move seen in recent weeks it is entirely possible a short-term bounce may be in the offing.
Gold breaks below $1240
With the yellow metal breaking below the $1240 level for the first time since June, a close below this level targets $1225 and then towards $1198.
An oversold reading on the daily relative strength index could see a bounce, but the $1244 level should see some resistance, with a close above here looking towards $1253.
Silver decisively oversold
Silver remains firmly oversold today, testing levels not seen since June of last year. A close around $18.50 would then open the way to $17.95.
Any bounce must retake $19, but the 20-day moving average at $19.25 is also likely to provide resistance, as has been the case throughout the current downtrend from $21.50.
Brent supported by $98.80
If Brent doesn’t rally much from its current level then we will be looking at its lowest weekly close since July 2012. So far $98.80 is holding as support, and a close below this would target the 11 September low around $97.50.
WTI testing 20-DMA
The $91.90 level is firm support for the time being here, but once again the price is testing the 20-DMA. Previous attempts to clear this level have not been wildly successful, so the downside scenario still seems to prevail. A break through the moving average would point WTI towards $95.15.