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.
Gold continues to consolidate
Yesterday brought the gold bounce we expected, pulling price away from the ongoing support level of $1178. Typically we have seen any upside restricted to below $1200 throughout May and thus I do think that any upside is likely to be capped around that level. No doubt we will have to see a breakout at some point, which I expect to be towards the upside. However, for now there is a clear period of consolidation which is likely to persist.
Silver heads for the top
Silver has seen a spike higher towards the upper end of the symmetrical triangle, providing a likely crossroads in the very near future. Should price move back to the upper threshold (currently $16.73) then it will provide the perfect opportunity.
I would expect to see price sell off from that level, but the fact that any move above there would invalidate the resistance means I can set my stops very close, providing a good risk/reward profile. While I do expect a little more upside, any move to $16.73 would bring a bearish view unless price breaks higher, in particular a move above $16.78.
Brent resurgence brings key questions for long-term implications
The spike higher in Brent crude yesterday came off the back of a very indecisive two days, with Friday posting a doji candle and Monday seeing very minimal volatility and direction. The question now is whether we can see a new high created or not.
A move above $69.62 would mean the bull trend continues. However, should the next high fail to top that marker, it would provide confidence that the uptrend is on the wane. For that reason, I am neutral today as I watch for intraday movements to provide clues as to which of the two will occur.
WTI spike falls short of new high
Much like Brent crude, WTI light has seen a significant spike yesterday which failed to create a new high. With price having created a new lower low, I am hesitant to jump back on board the bull train and, for now, I will similarly wait and see what the resolution is of this position.
A move above $62.57 would create a new high and bring a bullish outlook. Yet the failure to do so would lead to a reemergence of the bearish view.