Gold prices are trading near steady in early dealings Friday. A plummeting Chinese yuan against the U.S. dollar is working against gold, while a solidly lower U.S. dollar index is a bullish “outside market” force Friday. April gold was last down $0.30 at $1,331.60 an ounce. Spot gold was last quoted down $1.40 at $1,331.00. March Comex silver last traded up $0.001 at $21.315 an ounce.

The Chinese currency, the yuan, fell sharply against the U.S. dollar Friday—the steepest one-day decline in nine years. The drop in the yuan helped to pressure gold prices Friday. With gold priced in U.S. dollars on the world market, the weaker Chinese currency makes it more expensive for Chinese citizens to buy gold. China is the world’s largest consumer of gold. It appears the Chinese government is manipulating its yuan for world trade advantages and to punish currency speculators trading the yuan.

The U.S. dollar index fell to a two-month low Friday, due in part to the Euro currency rising following a European Union inflation report that came in slightly higher than expected. Consumer prices in the EU rose 0.8%, year-on-year, in February. That reading still does not match the European Central Bank’s inflation target of 2.0% a year, however. The ECB holds its monthly meeting next Thursday.

The crisis in Ukraine is still a worry to the market place. Gunmen have reportedly taken control of two airports in Crimea. The country is on the verge of financial collapse and needs funding soon from outside sources. It does appear the International Monetary Fund is moving quickly to provide funding to the Ukrainian financial system. If this situation escalates it would put even more risk aversion into the world market place, which would likely be bullish for gold and U.S. Treasuries and bearish for equities.

U.S. economic data due for release Friday includes the gross domestic product report, the ISM Chicago business survey, pending home sales, and the University of Michigan consumer sentiment survey.

Wyckoff’s Daily Risk Rating: 6.0 (The Ukraine uncertainty is keeping some risk aversion in the market place heading into the weekend.)

(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 $1,327.75 versus the P.M. fixing of $1,332.25.

Technically, April gold futures prices are still in a seven-week-old uptrend on the daily bar chart. Prices this week hit a four-month high. The gold bulls still have the near-term technical advantage. 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 $1,307.10. First resistance is seen at Thursday’s high of $1,336.40 and then at this week’s high of $1,345.60. First support is seen at Thursday’s low of $1,324.00 and then at this week’s low of $1,318.70.  

March silver futures bulls have the slight overall near-term technical advantage, but are fading a bit and need to show fresh power soon to keep it. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $22.18 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 Thursday’s high of $21.48 and then at $21.75. Next support is seen at the overnight low of $21.135 and then at this week’s low of $20.985.

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