Gold prices are sharply higher and scored a nearly four-month high in early U.S. trading Thursday. Keener safe-haven demand is featured following new developments in Europe and China overnight. Technically related buying and buy stop orders being triggered were also seen early Thursday. August Comex gold was last up $20.20 at $1,344.50 an ounce. Spot gold was last quoted up $17.10 at $1,344.25. December Comex silver last traded up $0.509 at $21.64 an ounce.

World stock markets are under selling pressure Thursday due to several new overnight developments: Weak economic data from the European Union, including Italy’s industrial output dropping 1.2% in May and Euro zone house prices declining 0.3% in the first quarter. Also, trade data from China did not meet expectations. China’s exports grew by 7.2%, year-on-year, in June, which was below market expectations of a 10% rise. And there are reports that a major bank or banks in Portugal are in trouble. All of the above have boosted the gold market, U.S. Treasuries and the U.S. dollar index, amid risk aversion that is keener in the market place Thursday.

Given the recent weak economic data coming out of the European Union, traders will be closely watching European bond yields, for clues on European investor confidence. The European Union sovereign debt crisis is not that far removed from the market place.

Traders and investors are also keeping a closer eye on the Middle East, as Israel this week launched a military offensive on the Gaza strip. Heavy fighting was reported overnight. This situation is a potential powder-keg that could further incite unrest in other parts of the Middle East.

U.S. economic data due for release Thursday includes the weekly jobless claims report, monthly wholesale trade inventories and ICSC chain store sales trends.

The market place has pretty much digested Wednesday afternoon’s FOMC minutes from June. The FOMC said the Fed is on track to end its monthly bond-buying program (quantitative easing) in October. The FOMC minutes offered no strong clues on specifically when the U.S. central bank will start to raise interest rates. However, the market place does not expect a rate hike this year, and that notion was reinforced by Wednesday’s latest FOMC minutes.

In other overnight news, reports said the Indian government did not relax gold import tax restrictions in its annual budget. Many reckoned the new Indian government would lower  the tax rate, which would have been bullish for the gold market.

Wyckoff’s Daily Risk Rating: 7.0 (There is keener risk aversion in the market place Thursday morning, due to the aforementioned developments.)

(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 $1,343.25 versus the previous P.M. fixing of $1,322.75.

Technically, August gold futures bulls have the firm overall near-term technical advantage and gained more momentum Thursday. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,375.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at this week’s low of $1,312.10. First resistance is seen at the overnight high of $1,346.00 and then at $1,350.00. First support is seen at $1,334.90 and then at $1,330.00.  

December silver futures bulls have the firm near-term technical advantage and gained fresh upside momentum Thursday as prices hit a nearly four-month high.  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 this week’s low of $20.945. First resistance is seen at the overnight high of $21.67 and then at $21.825. Next support is seen at $21.385 and then at the overnight low of $21.23.

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