Gold Treading Water, Looking For New Fundamental Inputs

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(Kitco News) – Gold prices are just slightly lower in early U.S. trading Friday. A lack of fresh fundamental news in the marketplace is prompting the gold and silver markets to drift on this last trading day of the week. The gold market bulls have so far eked out the better week. December Comex gold was last down $0.90 an ounce at $1,266.60. December Comex silver was last down $0.019 at $17.53 an ounce.

The key “outside markets” on Friday find the U.S. dollar index higher and hitting another seven-month high overnight. That’s limiting buying interest in the precious metals markets. Nymex crude oil prices are also firmer after hitting a 3.5-month high earlier this week. Reports said Russian oil officials have indicated Russia could increase its oil production if demand for its oil increases.

World equity markets were mixed overnight. European stock markets traded not far from unchanged as traders and investors debated whether the European Central Bank will or won’t extend its quantitative easing of monetary policy of purchasing bonds. An ECB survey said inflation in the Euro zone for 2016 will be 0.2%. The ECB wants to see inflation at 2.0%.

Asian stock markets were mostly lower. The Chinese yuan hit a six-year low against the U.S. dollar Friday, which prompted some concerns about flight of capital from the yuan into other currencies. Hong Kong markets were closed due to a typhoon. Bank of Japan governor Kuroda said Friday the central bank will continue its “extremely accommodative, expansionary monetary policy.”

U.S. economic data due for release Friday includes the Chicago Fed national activity index and the U.S. flash manufacturing purchasing managers’ index.

(Note: Follow me on Twitter–@jimwyckoff–for breaking market news.)

Wyckoff’s Daily Risk Rating: 2.5 (Trader and investor market risk aversion is not elevated today.)

(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).

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Technically, December gold futures bears have the overall near-term technical advantage. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears’ next near-term downside price breakout objective is closing prices below solid technical support at the October low of $1,243.20. First resistance is seen at this week’s high of $1,275.90 and then at $1,280.00. First support is seen at the overnight low of $1,261.70 and then at this week’s low of $1,251.10. Wyckoff’s Market Rating: 4.0

December silver bears have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing futures prices above solid technical resistance at $18.46 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is at this week’s high of $17.79 and then at $18.04. Next support is seen at last week’s low of $17.315 and then at the October low of $17.115. Wyckoff’s Market Rating: 3.5.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com