Gold prices are not straying too far from unchanged in early U.S. trading Wednesday, as the market place is on hold ahead of what is arguably the most important economic event of the week, if not the month: the FOMC statement and Fed Chair Janet Yellen’s press conference Wednesday afternoon. August Comex gold was last down $0.50 at $1,271.50 an ounce. Spot gold was last quoted down $0.90 at $1,271.50. July Comex silver last traded up $0.003 at $19.735 an ounce.

Most market watchers expect the FOMC to announce it will continue to taper its monthly bond-buying program, also called quantitative easing. As usual, the FOMC statement and Yellen’s comments at her press conference will be parsed for clues on future action coming from the FOMC. Look for many markets to gyrate at least a bit following the FOMC statement and possibly during Yellen’s press conference.

The civil war in Iraq remains a major market factor at mid-week and is prompting some keener risk aversion among many traders and investors. Reports overnight said violence in Iraq is still flaring and that the ISIS rebels have taken partial control over Iraq’s largest oil refinery. Crude oil prices are at multi-month highs on worries about Iraqi crude oil exports being reduced, and on concerns the violence in Iraq could spread to other Arab nations.

The Russia-Ukraine tensions are still running high this week as Russia has recently cut the natural gas supply to Ukraine and said it will supply natural gas to Ukraine only if paid for in advance.

The above geopolitical flashpoints will continue to be very closely monitored for new developments. Both situations are likely to worsen before they become better. The gold market, crude oil, U.S. Treasuries and the U.S. dollar should all at least see limited selling interest as these two developments play out.

In other news, the latest German government auction of its 10-year bond fetched a yield of 1.39%, which is the lowest rate in over a year. Demand for the German bund was termed weak, however.

The World Gold Council said it will meet in July to discuss revamping the London gold fix, which has been closely watched for over a century.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the FOMC meeting results.

Wyckoff’s Daily Risk Rating: 7.0 (Violence and civil war in Iraq has the world market place increasingly 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 $1,269.00 versus the previous P.M. fixing of $1,267.50.

Technically, August gold futures bears have the overall near-term technical advantage. However, the bulls have made a good move but need to show more power soon to suggest an uptrend can be sustained. 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 $1,285.10. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,250.10. First resistance is seen at Tuesday’s high of $1,273.50 and then at $1,280.00. First support is seen at the overnight low of $1,266.50 and then at this week’s low of $1,258.00.  

July silver futures bulls have gained some technical momentum, but need to show more power soon to keep it. 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 $18.97. First resistance is seen at Tuesday’s high of $19.775 and then at this week’s high of $19.875. Next support is seen at the overnight low of $19.665 and then at this week’s low of $19.435.

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