Gold Steady-Firmer; Selling Interest Limited by Geopolitics

                     Kitco Metals Roundup: Gold prices are steady to modestly higher in early U.S. trading Wednesday. Even though there is less risk aversion in the market place at mid-week, the geopolitical events recently are keeping sellers of gold pensive. August Comex gold was last up $2.40 at $1,308.80 an ounce. Spot gold was last quoted steady at $1,308.00. December Comex silver last traded up $0.039 at $21.105 an ounce.

The gold market has so far shown a muted reaction to reports just out that two Ukrainian military jets have been shot down by Russian rebels. Still, there is a bit more investor and trader risk appetite in the market place at mid-week. But the Russia-Ukraine crisis and the Israel-Hamas fighting remain on the front burner of the market place. Many veteran market watchers are surprised there has not been greater risk aversion in the market place amid the heightened geopolitical tensions the past week, or even the past few months. One explanation could be that the industrialized world is so awash in cash following the major central banks of the world pumping monies into the world financial system the past few years. In other words, there’s more money in the world to be thrown at many markets. That certainly appears to be the case in the major world stock indexes, which are hovering near record or multi-year highs. The above postulation also suggests serious price inflation should occur at some point down the road. However, at present there is more concern about deflation, especially in the European Union.

Gold, U.S. Treasuries and the U.S. dollar are safe-haven assets that have been and likely will continue to be supported from the heightened world tensions. I suspect that for the near term, trading action in many markets will day to day swing from risk-on to risk-off, depending on the news headlines of that day.

Traders and investors are looking forward to the next piece of economic data coming out of China—preliminary manufacturing data on Thursday.

U.S. economic data due for release Wednesday is light and includes the weekly mortgage applications survey and the weekly DOE liquid energy stocks report.

Wyckoff’s Daily Risk Rating: 7.0 (Russia-Ukraine crisis and Irael-Hamas conflict are still front-burner matters for markets.)

(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 $1,307.50 versus the previous P.M. fixing of $1,310.25.

Technically, August gold futures bulls and bears are on a level near-term technical playing field amid recent choppy trading. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the July high of $1,346.80. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,292.60. First resistance is seen at Tuesday’s high of $1,316.80 and then at this week’s high of $1,319.00. First support is seen at the overnight low of $1,305.40 and then at this week’s low of $1,302.20.  

December silver futures bulls have the slight near-term technical advantage amid choppy trading. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the July high of $21.67 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $20.70. First resistance is seen at this week’s high of $21.21 and then at $21.37. Next support is seen at this week’s low of $20.86 and then at $20.70. - kitco