Gold prices are moderately lower in early U.S. trading Wednesday and hit their daily low in the immediate aftermath of a much-stronger-than-expected U.S. gross domestic product report. August Comex gold was last down $4.20 at $1,294.00 an ounce. Spot gold was last quoted down $5.40 at $1,294.00. December Comex silver last traded down $0.009 at $20.635 an ounce.

The second-quarter U.S. gross domestic product report came in at up 4.0%, which was a big miss to the upside. A 3.0% rise was expected versus a reading of minus 2.9% in the first quarter. The GDP report pressured the gold market and U.S. Treasuries, while boosting modestly the U.S. stock indexes and the U.S. dollar index.

Wednesday begins in earnest the big U.S. economic data deluge this week. The ADP national employment report for July was out at 8:15 a.m. eastern time. That report is a precursor to Friday’s more important Labor Department employment report. The ADP figure was forecast to come in at up 238,000, but was a slight miss on the downside and reported at up 218,000. Friday’s U.S. jobs report is forecast to see a rise in non-farm payrolls of 230,000 in July versus up 288,000 in June.

Wednesday afternoon comes the results of the two-day meeting of the Federal Reserve’s Open Market Committee (FOMC). It’s expected that the FOMC will continue to taper its monthly bond-buying program (quantitative easing) by slicing another $10 billion per month from the program. Traders and investors don’t expect a lot of fresh, significant news to come out of the FOMC meeting.

For the first time in recent memory the FOMC results are likely to take a back seat to the GDP report Wednesday.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.l

In overnight news, the European Union reported its business confidence index, called the Economic Sentiment Indicator, rose to 102.2 in July from 102.1 in June. The July figure beat market expectations for a reading of 101.9. Since the West’s sanctions on Russia more significantly impact the EU’s economy, many reckon the EU will see some more downbeat economic data released in the coming weeks.

There are geopolitical issues impacting trading this week. The European Union and U.S. this week have slapped new and harsher sanctions on Russia. However, those sanctions did not surprise the market place and there was a muted reaction from markets Wednesday. Meantime, the Israel-Hamas conflict is not de-escalating. These matters will continue to be not far from the front burner of the market place in the near term. The German 10-year bund yield fell to a record low Tuesday, U.S. Treasury bond prices hit a new contract high Tuesday, and the U.S. dollar index hit nearly six-month high Wednesday—all due in part to safe-haven demand amid the geopolitical tensions.

Wyckoff’s Daily Risk Rating: 7.0 (Geopolitics are at play in the market place, but for now traders and investors are also a bit numb to those matters.)

(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 $1,297.50 versus the previous P.M. fixing of $1,299.25.

Technically, August gold futures bears have the slight near-term technical advantage as a three-week-old downtrend is 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 $1,325.90. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,287.50. First resistance is seen at $1,300.00 and then at $1,310.00. First support is seen at the overnight low of $1,291.00 and then at last week’s low of $1,287.50.  

December silver futures bears have the slight near-term technical advantage as prices are in a three-week-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $21.21 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 this week’s high of $20.91 and then at $21.00. Next support is seen at the overnight low of $20.55 and then at the July low of $20.42.

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