Gold prices are not straying far from unchanged in early trading Friday, but did poke to a three-week high in overnight trading. The market is pausing and seeing some chart consolidation following recent good gains. Don’t be surprised to see some more safe-haven demand surface as the trading session progresses, heading into an uncertain weekend on the geopolitical front. August Comex gold was last down $0.30 at $1,273.80 an ounce. Spot gold was last quoted up $1.00 at $1,274.50. July Comex silver last traded up $0.007 at $19.535 an ounce.

World stock and financial market traders and investors are late this week seeing anxiety develop regarding the civil war occurring in Iraq, which has escalated. Stock markets have sold off late this week, crude oil prices have soared to multi-month highs, and safe haven moves into gold and U.S. Treasuries have been featured. The U.S. said it is weighing its options and has not ruled out military action in Iraq. The market place is heading into an extra uncertain weekend. A bigger worry is that the violence in Iraq could spread to other Arab countries. There are also reports that Iran may be helping the Iraqi insurgents.

Remember just a short while ago when I discussed the U.S. Treasury bond and notes markets’ rising prices (falling yields) as being puzzling and possibly being a portent of new geopolitical trouble on the horizon—even if we did not yet know what was that trouble? Well, it appears the Iraqi situation at present could be what the U.S. Treasury market was sensing early. It could also be that the relative calm on the geopolitical front that the market place has experienced recently may be coming to an end.

In other overnight news, there was upbeat economic data coming out of China Friday. Its industrial production rose 8.8% in May, year-on-year. Other data released Friday also showed a healthier Chinese economy, which is the second-largest in the world. One dark cloud in China recently has been a copper market scandal that has pressured copper prices. Now, there is talk the financing scandal could spread to other commodities.

In currency market news, the British pound sterling rose Friday after the Bank of England’s governor said the U.K. could see interest rates rise sooner than many expect.

U.S. economic data due for release Friday includes the producer price index and the University of Michigan consumer sentiment survey.

Wyckoff’s Daily Risk Rating: 7.0 (New violence and civil war in Iraq has the world market place concerned.)

(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 $1,273.00 versus the previous P.M. fixing of $1,265.75.

Technically, August gold futures bears still have the overall near-term technical advantage. However, the bulls are making a move and gaining some upside technical momentum. However, a three-month-old downtrend is still 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 $1,285.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at this week’s low of $1,250.10. First resistance is seen at the overnight high of $1,277.60 and then at $1,280.00. First support is seen at the overnight low of $1,270.90 and then at $1,260.00.  

July silver futures hit a three-week high overnight as the bulls are gaining a bit of technical momentum. However, the bears have the overall near-term technical advantage. Prices are still in a 3.5-month-old downtrend on the daily bar chart, but now just barely. 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 this week’s low of $18.97. First resistance is seen at the overnight high of $19.64 and then at $19.825. Next support is seen at the overnight low of $19.47 and then at $19.33.

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