Gold prices are modestly higher in early U.S. trading Wednesday, on a mild short-covering rebound and some more bargain hunting following recent selling pressure. A slightly downbeat ADP jobs report also gave the gold market a bit of a lift in the aftermath of its release. August Comex gold was last up $3.10 at $1,247.60 an ounce. Spot gold was last quoted up $2.40 at $1,247.75. July Comex silver last traded up $0.062 at $18.825 an ounce.

The U.S. ADP national employment report was just released and it came in at up 179,000 jobs for May. That figure is lower than the 215,000 figure expected for the non-farm payrolls growth in this Friday’s U.S. jobs report. The ADP report did give a slight upside bump to the gold market this morning.

The other highlight report Wednesday is the Fed’s beige book, released in the early afternoon. Other data includes the weekly MBA mortgage applications survey, revised productivity and costs, the U.S. services PMI, the ISM non-manufacturing report, the global services PMI, and the weekly DOE liquid energy stocks report.

In overnight news, the European Union’s business activity slowed down in May. The Markit composite purchasing managers’ index for the Euro zone came in at 53.5 versus 54.0 in April. Also, EU gross domestic product for the first quarter was reported at an unrevised increase of 0.9%, year-on-year. Euro zone producer prices fell 0.1% in May from April and were down 1.2% year-on-year. These figures only increase concerns about deflationary price pressures gripping the European Union.

Thursday’s highly anticipated monthly monetary policy meeting of the European Central Bank is widely believed to see the bank announcing fresh monetary policy stimulus measures. Many believe the ECB refinancing rate will be reduced by around 10 or 15 basis points as well as a reduction in the deposit rate to just below zero, for a slightly negative return.

The recent strength of the U.S. dollar against the other major world currencies recently has been a bearish underlying factor for the gold and silver markets. The U.S. dollar index, which is a basket of six major currencies weighted against the greenback, hit a two-month high this week. It could be telling for the market place to see how the dollar index and the Euro currency react following Thursday’s ECB meeting and its likely move to stimulate. Many believe the markets have already factored in such a move by the ECB.

Wyckoff’s Daily Risk Rating: 5.5 (The Russia-Ukraine crisis has not escalated and the rest of the world is quieter regarding geopolitics.)

(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 $1,246.00 versus the previous P.M. fixing of $1,242.75.

Technically, August gold futures bears have the firm near-term technical advantage. A 10-week-old downtrend line is in place on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,268.50. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,220.00. First resistance is seen at this week’s high of $1,251.00 and then at $1,260.60. First support is seen at this week’s low of $1,240.20 and then at $1,235.00.  

July silver futures bears have the solid overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $19.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $18.00. First resistance is seen at $19.00 and then at $19.155. Next support is seen at the overnight low of $18.72 and then at the contract low of $18.615.

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