Gold is slightly lower in early dealings Tuesday morning, on some mild profit taking and chart consolidation following solid gains Monday that drive prices to a four-month high. Bulls still have the overall near-term technical advantage in both gold and silver markets.
April gold was last down $2.10 at $1,336.00 an ounce. Spot gold was last quoted down $0.50 at $1,336.50. March Comex silver last traded down $0.221 at $21.83 an ounce.

In overnight news, China’s stock markets were pressured by news the China central bank drained over 100 billion yuan from the Chinese financial system. The move is a short-term tightening of China’s monetary policy, but the longer-term implications of the move are unclear. The move by the Peoples Bank of China did not have much of an impact on world markets.

Traders will be looking for some direction from U.S. economic data due for release Tuesday, highlighted by the consumer confidence index. Other U.S. data due out Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the S&P/Case-Shiller home price index, the house price index, and the Richmond Fed business survey.

The Ukrainian civil unrest remains a significant geopolitical factor for the market place. Attention is turning from who will lead Ukraine to how will the nation can survive, financially. The U.S., the European Union and the International Monetary Fund are trying to figure out how to prop up Ukraine’s financial system before it collapses. The situation there remains fluid. The Ukrainian developments and some civil unrest and violence in Thailand recently have prompted increased safe-haven demand for gold.

Wyckoff’s Daily Risk Rating: 6.0 (The Ukraine uncertainty and recent Thailand unrest are keeping some risk aversion in the market place.)

(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 $1,332.75 versus the P.M. fixing of $1,334.75.

Technically, April gold futures prices are in a seven-week-old uptrend on the daily bar chart. The gold bulls still have the near-term technical advantage and still have momentum on their side. Bulls’ next upside near-term price breakout objective is to produce a close above technical resistance at $1,360.00. Bears' next near-term downside breakout price objective is closing prices below technical support at $1,300.00. First resistance is seen at Monday’s high of $1,339.20 and then at $1,350.00. First support is seen at the overnight low of $1,331.20 and then at $1,325.00.  

March silver futures bulls have the overall 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 $22.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $20.67. First resistance is seen at the overnight high of $22.025 and then at Monday’s high of $22.18. Next support is seen at the overnight low of $21.67 and then at Monday’s low of $21.52.

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