Commodity prices have been declining gradually over time. This week the fall was accelerated with most major commodities hitting yearly lows. Market participants observed Gold clipping the 1071 level and US Oil declining to less than $50 a barrel. Silver also being correlated to Gold followed through also trading around 14.50, levels not seen since late 2014.
Fundamentally today is quiet. With the Euro PMI release shortly, there are no news releases which may directly impact the commodities. We may see price action in force, so the technical levels will be broken down.
Gold remains bearish both technically and fundamentally. The appreciation of the US dollar has given hope again to fiat currencies, whilst reducing the charm of safe haven assets. News about the potential rate hike in the States may have aided the Gold bears to breach the initial 1150 support. Technically the daily timeframe is very bearish for Gold. We have lower lows and lower highs. Prices have found some minor support at 1071, but the daily trend defining level remains at 1100. Lagging and Leading indicators also suggest a further decline on this precious metal. The MACD has crossed to the downside and prices reside below the monthly pivot. Not only are we also below the 20 SMA but trading under the 1 standard deviation of the Bollinger bands. A correction below 1110 or a breakdown below 1071 may signal the continuation of this bearish trend.
Intraday – Gold dipped very sharply in the Asian sessions piercing the 1073 level. Studies have shown that prices stay within the S2 and R2 regions most of the time, coincidentally the S2 is where the 1073 level was. As of now prices have inclined back above the daily S1. We may see a continual move back to the 1.090 regions which are below the 20 SMA. A breakdown back below 1080 may open gates to 1073 once more.
US Oil remains bearish both technically and fundamentally. Prices of this commodity have been declining since 2014. A further decline below $50 occurred when data was released showing that crude oil inventories in the United States rose. With supply increasing, prices would normally decrease. US oil is also bearish on the technical scale. The attributes of a downtrend are valid and the next relevant support is at 47.0 which was last seen in March 2015. Daily traders may have traded the breakdown below the 50.0 level. With prices residing around the monthly S3, we may see a corrective move back to the previous 50.0 support which may be the new resistance. The daily trend defining level remains at 51.50, the previous lower high.
Intraday – US Oil offered an excellent breakdown opportunity on the 23rd. Prices currently reside below the daily pivot and 20 SMA. If the previous 49.0 support can act as resistance, then we may see a decline to the daily S1 of 48.15. One should also look out for a potential breakdown below 48.60.
Silver is correlated to Gold. Most attributes that affect Gold have a spin-off effect on Silver. This is bearish technically on the daily timeframe. Prices have been declining gradually since middle 2015. Currently, 14.50 is acting as a minor support but if it is broken, then the next key level will be 14.00 which was the lows of the end of 2014. Resistance can be seen at 15.00, this is also the trend defining the level. As long as prices keep below here, the bearish trend remains valid.
Intraday – We see a similar pattern on the hourly just as on Gold. In the Asian sessions, prices dipped to the daily S1 before correcting back up. As of now some resistance may be found below the 20 SMA and daily pivot of 14.75. If these intraday levels hold, then silver may decline once more back to the 14.50 support.
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