Gold prices are trading moderately lower and hit a four-month low in the early going Thursday as the near-term technical charts continue to favor the bearish camp. A downbeat U.S. gross domestic product report just released did lift the gold market up a bit from its daily low. June Comex goldwas last down $7.20 at $1,252.00 an ounce. Spot gold was last quoted down $5.40 at $1,253.75. July Comex silver last traded down $0.224 at $18.835 an ounce.

The preliminary U.S. gross domestic product report for the first quarter fell 1.0%, which was a bit worse than market expectations. Adverse winter weather was blamed for the shortfall. Gold did pop a few dollars in the immediate aftermath of the GDP report, but then returned to the moderately lower price levels seen before the report was released. 

Trading was quieter overnight with many markets pausing as focus is turning to next week’s monthly monetary policy meeting of the European Central Bank. It’s widely believed the ECB will announce further monetary policy stimulus measures at that meeting. Recent weak European Union economic data and fears of deflation setting in for the EU are solid reasons for the ECB to make a move next week.

A feature in the market place recently has been falling U.S. Treasury bond yields (rising prices). Bond yields have fallen to the lowest levels in almost a year. This “flight-to-quality” buying of T-bonds and T-notes suggests growing trader and investor unease—either from concerns about world economic growth or geopolitical tensions, or both.

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine crisis has not escalated and the rest of the world is quieter regarding geopolitics. However, the falling U.S. Treasury yields may be a harbinger of trouble ahead.)

(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 $1,254.00 versus the previous P.M. fixing of $1,263.50.

Technically, June gold futures bears have the firm near-term technical advantage. A six-week-old downtrend line is now 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 $1,277.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,250.00. First resistance is seen at the overnight high of $1,259.90 and then at Wednesday’s high of $1,267.30. First support is seen at $1,250.00 and then at $1,240.00.  

July silver futures bears have the solid overall near-term technical advantage and have gained downside momentum this week. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance this week’s high of $19.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the May low of $18.685. First resistance is seen at the $19.00 and then at the overnight high of $19.075. Next support is seen at the overnight low of $18.78 and then at $18.685.

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