(Kitco News) - Gold prices are modestly higher in early U.S. trading Friday, supported on some safe-haven buying amid a somewhat more skeptical market place heading into the last weekend of August. December Comex gold was last up $1.70 at $1,124.30 an ounce. September Comex silver was last down $0.012 at $14.405 an ounce.

On this last trading day of a tumultuous week, China’s Shanghai stock index was up another 5% Friday. China’s central bank was again intervening heavily to buy domestic shares. Reports said the central bank was even propping up the value of the Chinese yuan Friday, to stave off fleeing capital from China. Next Thursday China celebrates 70 years since its victory over Japan in World War Two. There will be a big military parade on that day. Market watchers speculate that China’s government does not want a slumping stock market to take the luster away from the big parade, and thus this week’s heavy government intervention to support its stock market. Japan’s Nikkei stock index was up 3% Friday.

However, U.S. and European stock markets are steady to weaker as more and more are market players are realizing the Chinese government cannot just brush over the serious faults in China’s economy and stock market. The Chinese government buying its own domestic shares cannot go on indefinitely. Selling pressure in the U.S. and Europe is also tied to some trepidation heading into the last weekend of August. Remember that the months of September and October can be very turbulent months for the stock market.

There was more dour and potentially deflationary world economic news Friday. Japan’s core consumer inflation was reported at zero in July and the figure is expected to turn negative in August. A key German inflation gauge was reported at zero percent in August from July and up 0.2%, year-on-year.

This week’s price action in world markets has led many to believe the U.S. Federal Reserve will not be able to raise interest rates in September and maybe not at its December FOMC meeting, either. However, mostly upbeat U.S. economic data released this week is adding just enough uncertainty on that matter to give the market place some indigestion. Markets hate uncertainty.

Traders should not assume that this week’s higher volatility—both on the upside and on the downside—in world financial and stock markets has ended.

The key “outside markets” early Friday find Nymex crude oil futures prices near steady following big gains scored Thursday—mostly on short covering and a corrective technical bounce. The U.S. dollar index is also near steady in early U.S. dealings Friday.

U.S. Federal Reserve officials are in Jackson Hole, Wyoming for their annual meeting to discuss monetary policy and other economic issues. Past meetings have produced news that moved the markets. However, Fed Chair Janet Yellen will not attend this year’s meeting in Jackson Hole. Any big news coming out of the event would likely occur on Friday or Saturday.

U.S. economic data due for release Friday includes personal income and outlays, and the University of Michigan consumer sentiment survey.

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Wyckoff’s Daily Risk Rating: 3.0 (Trader and investor market risk aversion has somewhat returned to the market place Friday, but not in keen fashion as of Friday morning.)

(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 5, with 1 being least risk-averse (most risk-on) and 5 being the most risk-averse (risk-off).

The London A.M. gold fix is $1,125.50 versus the previous P.M. fix of $1,119.00.

Technically, December gold futures bears have the near-term technical advantage. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,169.80. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,100.00. First resistance is seen at the overnight high of $1,132.30 and then at $1,140.00. First support is seen at this week’s low of $1,116.90 and then at $1,110.00. Wyckoff’s Market Rating: 3.0

September silver futures bears have the solid near-term technical advantage as prices hit a six-year low Wednesday. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.00. First resistance is seen at the overnight high of $14.54 and then at $14.705. Next support is seen at Thursday’s low of $14.05 and then at Wednesday’s contract low of $13.91. Wyckoff's Market Rating: 1.5.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
Follow me on Twitter @jimwyckoff