Gold prices are steady to firmer and hovering near a three-week high in early U.S. trading Friday. The market is hanging on to Thursday’s decent gains and the bulls have gained a bit of upside near-term technical momentum. June gold was last up $0.70 at $1,321.10 an ounce. Spot gold was last quoted up $3.30 at $1,322.00. May Comex silver last traded down $0.061 at $20.03 an ounce.

European and Asian stock markets were under pressure Friday, following the sharp plunge on Wall Street Thursday. Biotechnology and internet stocks in the U.S. were hardest hit on Thursday, but nearly all shares suffered. Gold was boosted in part Thursday by the big sell off on Wall Street. U.S. stock indexes were slightly lower Friday morning, before the daytime opens in New York. The mature bull market run in equities has sputtered in recent weeks, even though some indexes have touched new record highs. If the U.S. stock indexes start to come down from their lofty price levels and begin to trend lower, such would be a bullish factor for the raw commodity markets, including precious metals. One main reason for this would be the money coming out of the stock market would seek another asset class—likely hard assets like commodities, after having been parked in “paper” assets like stocks.

In other overnight news, China’s inflation rate came in slightly below expectations, it was reported Friday. The consumer price index fell 0.5% in March, month-on-month and was up 2.4% year-on-year. Also, Chinese premiere Li Keqiang reportedly said his country’s economic growth could be higher or lower than the 7.5% annual growth target. That led some to speculate China’s growth rate this year will not meet the government’s projection.

In the European Union, consumer prices in Spain fell in March for the first time since 2009, at down 0.2% year-on-year. This only adds to concerns the European Union, overall, is teetering on the verge of dangerous price deflation.

U.S. economic data due for release Friday includes the producer price index and the University of Michigan consumer sentiment survey.

The Russia-Ukraine tensions are still on the minds of traders and investors heading into the weekend. Pro-Russian demonstrators in Ukraine have become more active recently. The NATO secretary-general on Friday said Russian troops massed on the Ukrainian border appear ready to move on short notice. This situation could flare up quickly and once again become a geopolitical flash point.  Gold would likely see safe-haven demand increase on any escalation of this conflict.

The U.S. dollar index has taken a beating this week and fell to a three-week low. The eroding greenback is a bullish underlying factor for the raw commodity sector, including the precious metals.

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine tensions are moving closer to 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 $1,317.25 versus the P.M. fixing of $1,320.50.

Technically, June Comex gold bears still have the slight overall near-term technical advantage. However, the bulls are making a good move and recent upside price action is one clue this market has put in a near-term low. 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 last week’s low of $1,277.40. First resistance is seen at $1,325.00 and then at $1,330.00. First support is seen at the overnight low of $1,314.00 and then at $1,300.00.  

May silver futures hit a three-week high Thursday but then pulled back. Bears still have the near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at Thursday’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 the overnight high of $20.13 and then at $20.23. Next support is seen at the overnight low of $19.91 and then at this week’s low of $19.60.

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