Gold prices are weaker in early U.S. trading Friday, on a downside correction and chart consolidation following decent gains seen Thursday. August Comex gold was last down $5.50 at $1,311.40 an ounce. Spot gold was last quoted down $7.10 at $1,311.50. December Comex silver last traded down $0.137 at $21.055 an ounce.

Geopolitics is back on the front burner of the market place late this week, and with a double-barrel blast. On Thursday morning a Malaysian airliner was shot down on the Russia-Ukraine border, and on Thursday afternoon Israel started a ground offensive against Hamas on the Gaza strip. World stock markets recoiled on the two major world developments.  Meantime, safe-have assets, including gold, moved back into favor late this week.

However, as world trading moved from Asia, to Europe, to the U.S. Friday the market place settled down a bit. Many market watchers are scratching their heads that the market place has calmed down fairly quickly Friday morning. The U.S. stock indexes and U.S. Treasuries are stable, while safe-haven gold prices are moderately lower. As mentioned in this space earlier this week, I am surprised at the nonchalance of the market place this summer, regarding geopolitical matters that are significant.

The late-week flare-up of geopolitics is very likely not a “one and done” event. As the Malaysian jet shoot-down mystery unravels, it seems plausible that Russian president Vladimir Putin will come under even more scrutiny from the West. The West’s leaders consider Putin a thug but they must respect that Putin is still the one with his finger on the button of the world’s second-largest nuclear arsenal. The world will be watching as the U.S. and its allies figure out what to do with Putin—especially if his regime is implicated in the downing of the Malaysian airliner.

On the Israeli-Hamas front, it appears Israel is taking an extra hard line against its archenemy this time. An incursion of ground troops into Gaza is unsettling to traders and investors, but the bigger worry of the market place is if Iran and other Arab countries become more involved in the conflict. Unrest in one region of the Middle East in recent years has seemed to incite additional unrest in other regions.

All of the above augurs firmly in favor of safe-haven investment assets that include gold, U.S. Treasuries and the U.S. dollar—and against already lofty major world stock indexes. Many market watchers are wondering if this geopolitical unrest will usher in the much-anticipated end to the major bull market run in equities—or at least a significant downside correction that many feel is overdue.

U.S. economic data due for release Friday includes the University of Michigan consumer sentiment survey and leading economic indicators.

Wyckoff’s Daily Risk Rating: 8.0 (Russia-Ukraine crisis and Irael-Hamas conflict are front-burner matters for markets heading into an extra uncertain weekend.)

(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 $1,310.25 versus the previous P.M. fixing of $1,302.50.

Technically, August gold futures bulls and bears are back on a level near-term technical playing field. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the July high of $1,346.80. Bears' next near-term downside breakout price objective is closing prices below solid technical support at this week’s low of $1,292.60. First resistance is seen at $1,320.00 and then at $1,325.00. First support is seen at the overnight low of $1,308.30 and then at $1,300.00.  

December silver futures bulls have the slight near-term technical advantage amid choppy trading. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the Julys high of $21.67 an ounce. The next downside price breakout objective for the bears is closing prices below major technical support at $20.00. First resistance is seen at $21.25 and then at $21.385. Next support is seen at this week’s low of $20.70 and then at $20.47.

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