(Kitco News) - Gold prices are trading not too far from unchanged levels in early U.S. dealings Wednesday. The bulls are on the ropes and trying to stabilize the market after gold hit a three-week low on Tuesday. Gold prices have shed around $40.00 an ounce so far this week as the bears have regained near-term technical control. August Comex gold was last up $0.10 at $1,297.20 an ounce. Spot gold was last quoted up $2.40 at $1,296.50. December Comex silver last traded down $0.192 at $20.755 an ounce.
There was upbeat economic news coming from China Wednesday. The world’s second-largest economy had a slightly better-than-expected second-quarter GDP growth rate of 7.5%, year-on-year. A 7.4% growth reading was expected. Asian stock markets were supported on the China GDP data Wednesday. This news is a bullish underlying development for the raw commodity markets, including the precious metals.
The economic highlight of the trading week is testimony on U.S. monetary policy from Federal Reserve Chair Janet Yellen before the U.S. Congress on Tuesday and Wednesday. Some market watchers took Yellen’s comments to the Senate Tuesday as being a bit hawkish, but that’s a stretch. The buzz after her remarks Tuesday was that she commented on what she perceived to be over-priced stock market sectors. Yellen testifies before the U.S. House Wednesday.
The somewhat surprising lack of concern in the market place regarding geopolitics has prompted better risk appetite in the market place this week. Tensions are rising on the Gaza strip as Israel prepares to bomb Hamas targets in that region and possibly send in ground troops. European Union sovereign debt concerns, which last week resurfaced after a bank in Portugal was reported in serious trouble, are this week being ignored by traders and investors. The Iraqi civil war and the Russia-Ukraine conflict have faded well to the background of the market place. Maybe it’s the summertime doldrums that have investors and traders more concerned about family vacations and outdoor events and less on geopolitics. I suspect that as the calendar turns to September, or before, the aforementioned matters will be of much greater concern to the market place.
U.S. corporate earnings reports are also be featured this week. So far, major companies’ earnings have been mostly upbeat.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the producer price index, Treasury international capital data, industrial production and capacity utilization, the NAHB housing market index, and the weekly DOE liquid energy stocks report.
Wyckoff’s Daily Risk Rating: 6.0 (While the geopolitical tension in the market place is light at present, I suspect the Israel-Hamas fighting could quickly ratchet up concerns among traders and investors.)
(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.
The London A.M. gold fix is $1,297.50 versus the previous P.M. fixing of $1,310.00.
Technically, August gold futures bears now have the near-term technical advantage. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,325.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,275.00. First resistance is seen at the overnight high of $1,300.00 and then at $1,305.00. First support is seen at this week’s low of $1,292.60 and then at $1,285.00.
December silver futures bulls are also fading quickly as prices hit a four-week low overnight. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $21.67 an ounce. The next downside price breakout objective for the bears is closing prices below major technical support at $20.00. First resistance is seen at the overnight high of $20.88 and then at $21.00. Next support is seen at $20.47 and then at $20.25.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff
