Gold prices are near unchanged in early U.S. dealings Wednesday, after being under moderate selling pressure in overnight action. A weaker-than-expected U.S. gross domestic product report helped to lift gold. It’s a big U.S. economic day Wednesday and traders are bracing for some higher volatility. June gold was last up $0.50 at $1,296.70 an ounce. Spot gold was last quoted up $1.20 at $1,297.50. May Comex silver last traded down $0.128 at $19.36 an ounce.

The advance first-quarter GDP figure came in at up 0.1%, compared to forecasts for a gain of 1.1% in the period. The surprisingly weak number popped the gold market a few dollars and brought prices back to near unchanged on the day.

Wednesday is an extra important trading day. Not only is important U.S. economic data released, it’s also the last trading day of the month, which makes it a critical day from a technical perspective. Wednesday afternoon finds the results of the latest two-day FOMC meeting of the Federal Reserve. The FOMC is expected to continue to wind down its monthly bond-buying program, called tapering.

In overnight news, inflation in the European Union picked up in April, which is a good thing, given the recent worries about deflation gripping the bloc. However, the rise was not as much as economists expected. EU consumer prices rose 0.7% year-on-year, up from the 0.5% rate reported for the same period in March. The data lands in the camp of monetary policy doves that want the European Central Bank to further stimulate its monetary policy.

The Russia-Ukraine crisis is still on the radar screen of the world market place. The matter has not de-escalated. This situation is likely to get worse before it gets any better. Gold and other safe-haven assets will likely at least see selling interest limited due to the instability in Ukraine.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the employment cost index, the Chicago ISM business survey, the weekly DOE energy stocks report and the U.S. Treasury’s quarterly refunding announcement.

As the calendar turns to May the old stock market adage comes to mind: “Sell in May and go away.” If this seasonal phenomenon holds true this year and U.S. stock indexes weaken in the coming months, such would be a bullish underlying factor for the raw commodity sector, including gold. Reason: Raw commodities are a competing asset class with equities. And recently, it’s the equities that have been the winner in the quest for investor monies.

Wyckoff’s Daily Risk Rating: 7.0 (The Russia-Ukraine tensions are still elevated.)

(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 fixing is $1,292.00 versus the previous P.M. fixing of $1,297.75.

Technically, June gold futures bears have the overall near-term technical advantage. A six-week-old downtrend line is in place on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,306.60. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the April low of $1,268.40. First resistance is seen at the overnight high of $1,296.80 and then at $1,300.00. First support is seen at Tuesday’s low of $1,286.10 and then at $1,280.00.  

May silver futures bears have the solid overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $19.91 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the April low of $18.93. First resistance is seen at the overnight high of $19.45 and then at Tuesday’s high of $19.59. Next support is seen at $19.00 and then at $18.93.

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