(Kitco News) - Gold prices are weaker in early U.S. trading Friday. The recent rally in world stock markets has hurt the safe-haven metal, as such suggests investor risk appetite has rebounded strongly since the late-June Brexit vote. August Comex gold was last down $7.70 an ounce at $1,323.30. September Comex silver was last down $0.08 at $19.74 an ounce.
World stock markets were mostly weaker overnight, on profit taking from recent gains and some downbeat economic data coming out of the United Kingdom. Also, some market watchers are a bit disappointed the Bank of Japan and European Central Bank did not this week announce, or hint at, fresh monetary policy stimulus measures coming soon. U.S. stock indexes are pointed toward firmer openings when the U.S. day session begins in New York.
The U.K. purchasing managers’ survey (PMI) came in at 47.7 in July—the lowest reading in seven years. A reading below 50.0 suggests contraction. The report suggests the Brexit vote has many purchasing mangers’ worried. Meantime, the Euro zone composite Markit PMI fell to 52.9 in July from 53.1 in June. A reading of 52.4 was expected by forecasters. The report was deemed upbeat because the Brexit vote apparently did not significantly impact the Euro Zone purchasing managers’ decisions.
The key “outside markets” on Friday find the U.S. dollar index firmer and Nymex crude oil prices slightly higher.
U.S. economic data due for release Friday is light and includes the U.S. flash manufacturing PMI.
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Wyckoff’s Daily Risk Rating: 2.5 (Trader and investor market risk aversion is not elevated today.)
(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 5, with 1 being least risk-averse (most risk-on) and 5 being the most risk-averse (risk-off).
Technically, August gold futures bulls still have the overall near-term technical advantage but are fading. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,350.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,300.00. First resistance is seen at the overnight high of $1,334.00 and then at $1,340.00. First support is seen at $1,320.00 and then at this week’s low of $1,310.70. Wyckoff’s Market Rating: 6.5
September silver bulls still have the firm overall near-term technical advantage, but are also fading. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at the July high of $21.22 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $19.00. First resistance is at $20.00 and then at this week’s high of $20.295. Next support is seen at this week’s low of $19.27 and then at $19.00. Wyckoff's Market Rating: 6.5.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
