Gold prices are firmer in early U.S. trading Monday, supported on some short covering and bargain hunting amid a recently improved near-term technical posture of the market. A weaker U.S. dollar index on this day is also a supportive underlying factor for the gold market. June gold was last up $7.20 at $1,300.60 an ounce. Spot gold was last quoted up $7.00 at $1,300.25. July Comex silver last traded up $0.216 at $19.545 an ounce.

Reports overnight also said a government election result in India last Friday is a positive for the gold market as the more pro-business election winner could move to ease the current import restrictions on gold.

The European Central bank said Monday it is coordinating with Switzerland and Sweden on gold transactions but none have plans to sell significant amounts of gold. The coordination is in place to keep the gold market stable during any transactions that do occur. The ECB said gold remains “an important element of global monetary reserves.” The World Gold Council said Monday this news only underscores the importance of gold as an investment asset class.

European stock markets were weaker Monday, led by weakness in the Italian stock market. Spanish and Italian bond yields are again on the rise, which suggests renewed strains within the periphery countries of the European Union. These developments follow recent weak economic data coming out of the EU. The renewed worries about the overall health of the European Union’s collective economy have been part of the reason the U.S. Treasury market yields have dropped recently. The Euro currency has also slumped recently, while the U.S. dollar index has rallied. Anxiety in the market place regarding a renewed European Union sovereign debt crisis could also work to support the safe-haven gold market.

Asian equity markets were also weaker on some more downbeat economic news coming out of China. The real estate market in China is showing more signs of weakness, weekend reports out of China said.

There is no major U.S. economic data due for release Monday.  

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine tensions are still somewhat elevated and U.S. Treasuries are rallying on safe-haven buying.)

(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 $1,301.00 versus the previous P.M. fixing of $1,291.50.

Technically, June gold futures bulls and bears are on a level near-term technical playing field. Prices are in a choppy and sideways trading range on the daily bar chart. That suggests this market could continue to trade sideways and choppy, in the range. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the May high of $1,315.80. Bears' next near-term downside breakout price objective is closing prices below solid technical support at this week’s low of $1,277.70. First resistance is seen at last week’s high of $1,309.20 and then at $1,315.80. First support is seen at the overnight low of $1,289.50 and then at $1,285.00.  

July silver futures bears still have the overall near-term technical advantage. However, prices are “basing” at lower price levels, to begin to suggest a market bottom is in place. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the May high of $20.005 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $19.045. First resistance is seen at the overnight high of $19.61 and then at $19.77. Next support is seen at the overnight low of $19.31 and then at $19.25.

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