(Kitco News) - Gold prices are modestly higher in early U.S. trading Wednesday, on some short covering and bargain hunting. The yellow metal is trying to regain its composure after suffering a severe beating on Tuesday that turned the technical posture from near-term bullish to near-term bearish. June gold was last up $5.20 at $1,305.60 an ounce. Spot gold was last quoted up $3.30 at $1,306.25. May Comex silver last traded up $0.266 at $19.75 an ounce.
A U.S. housing starts report just released that did not meet market expectations also helped lift the gold market.
The Russia-Ukraine crisis remains in keen focus this week. The latest developments have seen gunfire in eastern Ukraine cities, with Russian war planes buzzing the region. The Ukrainian president has ordered his troops to regain control of the cities in eastern Ukraine that had been taken over by pro-Russia rebels. Ukraine government officials have accused Russia of instigating and even arming the protesters. There is uncertainty regarding how the U.S., the world’s only military super power, will react to the latest developments in Ukraine.
As a three-day Easter holiday weekend approaches, it will not be surprising to see the safe-haven assets, including gold, see more demand and to see the market place move into a “risk-off” mode. The Russia-Ukraine crisis could escalate into an international crisis in a hurry.
Key economic data from China on Wednesday saw the world’s second-largest economy grow by 7.4%, year-on-year. That figure was slightly above the 7.3% annual growth rate expected by forecasters but still the slowest growth rate in 18 months. China construction starts in the first quarter fell by 25% and sales of homes fell by 7.7% in the same period. The Asian and European stock markets were supported on the China GDP news. China is the world’s largest consumer of raw commodities. The gold market’s plunge on Tuesday was blamed in part of worries about demand for physical gold coming out of China.
U.S. economic data due for release Wednesday includes the Federal Reserve’s beige book, weekly mortgage applications survey, new residential construction, industrial production and capacity utilization, and the weekly DOE liquid energy stocks report. Fed Chair Janet Yellen also gives a speech in New York today.
Wyckoff’s Daily Risk Rating: 7.5 (The Russia-Ukraine tensions are squarely on the front burner of the market place.)
(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 $1,299.00 versus the P.M. fixing of $1,298.00.
Technically, June Comex gold bears have the level near-term technical advantage. Prices Tuesday dropped below the key 200-day moving average that is closely watched by many chartists. Today, the 200-day MA comes in at the $1,300.00 mark. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,331.40. Bears' next near-term downside breakout price objective is closing prices below technical support at the April low of $1,277.40. First resistance is seen at the overnight high of $1,304.70 and then at $1,310.00. First support is seen at the overnight low of $1,293.50 and then at this week’s low of $1,284.40.
May silver futures bears have the solid near-term technical advantage and gained more downside momentum Tuesday as prices hit a 2.5-month low. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $20.40 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $19.00. First resistance is seen at the overnight high of $19.645 and then at $20.00. Next support is seen at the overnight low of $19.325 and then at Tuesday’s low of $19.22.
Related Stories:
- Market Feels Comfortable At $1,300 Ahead Of Holiday
- NATO Ups Military Presence Amid Russian Threat
- Russian Economy Hit By Ukraine Turmoil
Read the latest news in gold and precious metals markets at Kitco News.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff
