Gold prices are moderately higher in early U.S. trading Wednesday, boosted on some short covering and bargain hunting. A weaker U.S. dollar index is also adding some buying interest to the precious metals markets Tuesday. The gold market bulls have now pulled themselves back up onto a level near-term technical playing field with the bears. June gold was last up $12.30 at $1,307.50 an ounce. Spot gold was last quoted up $13.70 at $1,309.00. July Comex silver last traded up $0.438 at $19.99 an ounce.

The just-released U.S. producer price index for April was a bit “hot” at up 0.6%. However, the gold market showed little reaction to that data.

In overnight news, European Union industrial production fell in 0.3% in March from February, and was down 0.1% year-on-year. Germany’s consumer price index fell 0.2% in April, from March, and was up 1.3% year-on-year. France’s consumer price index was unchanged in April from March and  up 0.7% year-on-year. These figures are further cause for concern about deflation in the EU. In another sign that the market place believes the European Central Bank will further ease its monetary policy soon—to ward off the threat of deflation--a German treasury note offering Wednesday fetched the lowest yield since last July. Many now reckon the ECB will announce a new monetary stimulus plan at its meeting in early June.

In other news, China’s central bank this week is urging local banks to step up their mortgage lending to first-time home buyers, for fear of China’s property sector falling into a deeper slump.

The Russia-Ukraine situation has not changed much recently, as the market place views it. While tensions are still elevated in the region, traders and investors have become lackadaisical on the matter. It will take a major new development in the situation to shake the market place out of its malaise regarding the Ukraine-Russia conflict—which is likely to occur sooner rather than later.

Reports overnight said the London silver fix will end for good on August 14, after more than 100 years of existence. Three banks that had participated in the fixing pulled out, prompting the termination of the silver fix.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the producer price index, and the weekly DOE energy stocks report.

The Dow and S&P stock indexes have touched new record highs this week. The stock market remains the asset class which is at the forefront of traders’ and investors’ minds, and that which is pulling away money from other competing asset classes, such as raw commodities and real estate. The very mature bull run in the U.S. stock market will not go on forever. Once the money starts to come out of the presently tautly inflated stock market balloon, the other asset classes will stand to benefit.

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine tensions are still elevated but the market place has become numb to the matter as no fresh, major developments have occurred.)

(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 $1,300.25 versus the previous P.M. fixing of $1,296.50.

Technically, June gold futures bulls and bears are now on a level near-term technical playing field. That suggests this market could continue to trade sideways and choppy, in a range. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the May high of $1,315.80. Bears' next near-term downside breakout price objective is closing prices below solid technical support at this week’s low of $1,277.70. First resistance is seen at $1,315.80 and then at $1,320.00. First support is seen at $1,300.00 and then at the overnight low of $1,291.60.  

July silver futures bears still have the overall near-term technical advantage. However, prices could be “basing” at lower price levels, to begin to suggest a market bottom is in place. Wednesday’s price gains give the bulls upside momentum as a 2.5-month-old downtrend on the daily bar chart was negated. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the April high of $20.43 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at this week’s low of $19.045. First resistance is seen at the overnight high of $20.005 and then at $20.25. Next support is seen at $19.77 and then at the overnight low of $19.51.

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