Gold prices are lower in early U.S. trading Tuesday, as the shorter-term traders are taking some profits and the market sees a downside technical correction from recent gains that saw gold hit a four-month high Monday. A slight easing of tensions regarding the Russian troop incursion into Ukraine has also put some risk appetite back into the market place Tuesday morning. April gold was last down $17.10 at $1,333.30 an ounce. Spot gold was last quoted down $18.00 at $1,332.75. May Comex silverlast traded down$0.328 at $21.12 an ounce.

It appears the situation regarding the Russian military invasion of Crimea and the civil unrest in Ukraine has de-escalated just a bit Tuesday, which has put some risk appetite back into the world market place. The U.S. dollar, U.S. Treasuries, gold and crude oil have all backed down Tuesday from their rallies Monday, while the U.S. stock indexes are rallying Tuesday morning, after selling pressure Monday. Russian stock and financial markets were also reportedly stabilizing Tuesday. This is likely due to reports Russian President Vladimir Putin has halted his military exercises near the Ukrainian border and ordered troops there back to their bases. However, Russian troops are still on the ground in the Crimea region of Ukraine and this situation is still fluid and could escalate quickly. And the matter of Ukraine being in civil disarray and near financial collapse has not changed the past 24 hours.

The U.S. is already taking action on economic and diplomatic sanctions against Russia. Russian officials have fired back by saying any sanctions against them will see retaliation from Russia. Economic sanctions levied against an already unstable Russian economy would have major ramifications for Russia and those world companies that deal with Russia. Ukraine and the Black Sea region are rich in natural resources and the Black Sea is a major export hub. Any military conflict in the region would very likely disrupt shipping of any commodity coming out of the Black Sea.

In other news overnight, producer prices in the European Union fell 0.3% in January, and were down 1.3% year-on-year. That’s the largest year-on-year drop in producer prices in the Euro zone in over four years. The report underscores there should still be concern in the market place about deflationary price pressures in the European Union.

U.S. economic data due for Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the ISM New York report on business, and the IBD/TIPP economic optimism index. The big economic news of the week will be the European Central Bank’s monthly monetary policy meeting on Thursday and the U.S. monthly employment report on Friday.

Wyckoff’s Daily Risk Rating: 6.0 (The Russian military invasion of Crimea and the Ukraine unrest have de-escalated a bit—for now.)

(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 $1,339.50 versus the P.M. fixing of $1,349.50.

Technically, April gold futures prices are still in a two-month-old uptrend on the daily bar chart and prices have just 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 this week’s high of $1,355.00. Bears' next near-term downside breakout price objective is closing prices below technical support at last week’s low of $1,318.70. First resistance is seen at $1,340.00 and then at $1,350.00. First support is seen at Monday’s low of $1,330.70 and then at $1,325.00.  

May silver futures bulls have the slight overall near-term technical advantage, but need to show more power soon to keep it. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the February high of $22.215 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $20.63. First resistance is seen at the overnight high of $21.54 and then at this week’s high of $21.74. Next support is seen at last week’s low of $21.025 and then at $20.63.

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