Gold prices are moderately higher and have pushed back above the key $1,300.00 level in early U.S. trading Thursday. The precious metal is boosted by some positively perceived economic data coming out of China. June gold was last up $13.10 at $1,301.20 an ounce. Spot gold was last quoted up $10.10 at $1,302.50. July Comex silver last traded up $0.392 at $19.73 an ounce.

The preliminary HSBC China manufacturing purchasing managers index (PMI) for May came in at 49.7 versus 48.1 in April and was the best reading in five months. This news helped to lift world stock markets and the raw commodity sector as China is the world’s largest consumer of raw commodities and is the world’s second-largest economy. Still, a PMI reading below 50.0 suggests contraction. China had recently seen a string of downbeat economic reports.

Gold prices are also firmer Thursday in part due to the Indian government relaxing rules on the importation of gold by consumers. This is likely to result in more gold purchasing from Indian consumers. India is already the world’s second-largest consumer of gold.

Meantime, the Markit composite purchasing managers’ index for the European Union fell to 53.9 in May from 54.0 in April. This report was in line with market expectations. The focus in the European Union at present is parliamentary elections taking place. Bond yields in the periphery EU countries (namely Spain and Italy) have risen recently, partly due to concerns about voters putting into office extremists who are anti-EU and may not want to pay off their own nation’s sovereign debt.

The market place has quickly digested the minutes from the latest U.S. FOMC meeting, which were released Wednesday afternoon. Those minutes showed Federal Reserve officials discussing how to go about raising interest rates and that caused a modest reaction by some markets, but it was short-lived. In the end most traders and investors reckoned there was not much new in the FOMC minutes and that U.S. interest rates are likely to remain low for quite some time to come.

The Russia-Ukraine territorial crisis is on a low simmer at present but that could change this coming weekend. The Ukraine holds a presidential election on Sunday, which could produce new tension in the region. I would not be surprised to see that within the next week or so this situation flares up again to become a front-burner issue in the market place. Such would likely be a bullish development for U.S. Treasuries, the U.S. dollar and gold.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Chicago Fed national activity index, the U.S. flash manufacturing PMI, leading economic indicators, the Kanas City Fed manufacturing survey, and existing home sales.

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine tensions are still somewhat elevated, even though no new developments have occurred the past couple weeks.)

(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 $1,294.50 versus the previous P.M. fixing of $1,287.25.

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 the May low of $1,272.00. First resistance is seen at this week’s high of $1,305.70 and then at $1,315.80. First support is seen at the overnight low of $1,290.10 and then at this week’s low of $1,282.90.  

July silver futures bears 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 this week’s high of $19.685 and then at $19.93. Next support is seen at $19.50 and then at the overnight low of $19.36.

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