Monday April 14, 2014 8:19 AM
(Kitco News) - Gold prices are higher and hit a three-week high in early U.S. trading Monday. The market is supported on safe-haven buying interest and short covering due to anxiety surrounding the Russia-Ukraine conflict. June gold was last up $4.90 at $1,323.90 an ounce. Spot gold was last quoted up $4.60 at $1,323.50. May Comex silver last traded down $0.136 at $19.81 an ounce.
It’s a “risk-off” day in the market place Monday, as Russia-Ukraine tensions are back on the front burner. Asian and European stock markets were under selling pressure Monday and the U.S. stock indexes are seeing follow-through selling from last week’s losses, in early electronic trading Monday morning. Gold and the U.S. dollar are seeing safe-haven buying interest Monday, but U.S. Treasuries are not. Crude oil prices have also rallied due to the geopolitical uncertainty of the Russia-Ukraine matter.
During the weekend Ukrainian troops were mobilized to counter a surging pro-Russia movement by protesters who have tried to occupy some Ukraine cities. Ukraine government officials have accused Russia of instigating and even arming the protesters.
Meantime, Russian troops are still massed on the Russia-Ukraine border. The NATO secretary-general last week those troops appear ready to move on short notice. This situation has flared up and once again has become a potential geopolitical flash point. There are also questions regarding how the U.S. will react to the latest developments in the region. It’s very likely this conflict will remain a major markets-moving factor for at least the rest of this week. This will at the least limit selling interest in gold for the near term, if not be outright supportive for upside price action.
In other news, European Central Bank president Mario Draghi said Saturday the recent strength of the Euro currency could prompt fresh easing of ECB monetary policy, in order to keep deflationary pressures on the EU economy in check. This news dropped the Euro and supported the U.S. dollar index. Gold has backed down from its overnight high partly due to the firmer greenback.
U.S. economic data due for release Monday includes retail sales, and manufacturing and trade inventories.
Wyckoff’s Daily Risk Rating: 7.5 (The Russia-Ukraine tensions are now 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 $1,324.50 versus the P.M. fixing of $1,318.00.
Technically, June Comex gold bulls and bears are back on a level near-term technical playing field, but the bulls have momentum on their side. Bulls’ next upside near-term price breakout objective is to produce a close above technical resistance at $1,350.00. Bears' next near-term downside breakout price objective is closing prices below technical support at $1,300.00. First resistance is seen at the overnight high of $1,330.80 and then at $1,335.00. First support is seen at the overnight low of $1,319.40 and then at Friday’s low of $1,314.00.
May silver futures bears have the near-term technical advantage as prices have traded sideways and choppy for three weeks. 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 the March low of $19.575. First resistance is seen at $20.00 and then at the overnight high of $20.14. Next support is seen at the overnight low of $19.72 and then at last week’s low of $19.60.
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