Gold futures prices are moderately higher and the spot gold market is near steady in early U.S. trading Tuesday. Prices hit a 3.5-month high overnight. Technical buying is seen in gold and silver as both markets are in price uptrends on their daily charts. Perceived bargain hunting by traders and investors has also been prevalent in gold and silver recently. August Comex gold was last up $4.70 at $1,326.70 an ounce. Spot gold was last quoted down $0.50 at $1,327.00. December Comex silver last traded up $0.080 at $21.195 an ounce.

Monday was an extraordinary trading day in the markets. It was the last trading day of the month, of the quarter and of the first half of the year. That made it an extra important trading day from a technical perspective. It is technically significant when a market price closes out the week, month or quarter at its high or low close for that period. In my 30 years of covering and analyzing markets, I have never seen so many futures markets that closed at their monthly high or low, or monthly and quarterly high or low closes. The significance of this rare occurrence is that many markets are presently trending up or down on a near-term (daily chart) basis, and many of those price trends are very strong.

It’s also unusual to see so many markets that are in solid uptrends or downtrends at the same time. Most of the time in markets, the majority of markets are trending sideways and choppy on a near-term basis. The other observation on the present state of the market place is that the key “outside markets” appear to be having less of an impact on the market place. This also suggests that individual markets appear to be paying more attention to their own supply and demand fundamentals and less attention to what the outside markets are doing. Most traders and investors would agree that’s a good development.

Important economic data from China Tuesday was upbeat and in line with market expectations. The China purchasing managers index (PMI) came in at 51.0 in June from 50.8 in May. The HSBC June PMI came in at 50.7 from 49.4 in May. A number above 50.0 suggests expansion.

Meantime, the European Union’s manufacturing PMI came in at 51.8 in June versus 52.2 in May. The reading was expected by traders and investors to come in at 51.9 in June.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. manufacturing PMI, construction spending, the ISM manufacturing report on business, the IDB/TIPP economic optimism index, the global manufacturing PMI, and domestic auto sales.

It’s a holiday-shortened trading week in the U.S., what with the Independence Day holiday on Friday. The key U.S. jobs report is issued a day early this month, on Thursday. This report is arguably the most important U.S. economic data of the month. Also on Thursday will be the monthly monetary policy meeting of the European Central Bank. It will be an extra important trading day on Thursday.

The civil war in Iraq is still an issue for the market place but it has at least temporarily moved off the front burner. The oil fields in the south of Iraq have not seen their production levels curtailed by the civil war taking place in the north of Iraq. Don’t be surprised to see in the near future this matter move back into the spotlight of the market place and once again significantly impact some market prices.

Wyckoff’s Daily Risk Rating: 6.0 (Civil war in Iraq still has the world market place somewhat concerned but there have been no major new developments recently.)

(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 $1,325.75 versus the previous P.M. fixing of $1,315.00.

Technically, August gold futures bulls have the overall near-term technical advantage as prices are in a four-week-old uptrend on the daily chart. The gold 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 breakout price objective is closing prices below solid technical support at $1,300.00. First resistance is seen at the overnight high of $1,334.90 and then at $1,350.00. First support is seen at $1,320.00 and then at Monday’s low of $1,311.00.  

December silver futures bulls have the near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the March high of $21.825 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $20.00. First resistance is seen at last week’s high of $21.30 and then at $21.50. Next support is seen at the overnight low of $21.125 and then at $21.00.

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