Gold prices are modestly lower in early U.S. trading Friday, following a better-than-expected U.S. economic report, and on some fresh news reports coming out of Russia.

Prices have backed down from the overnight gains that scored three-week highs. There is still some risk aversion in the market place heading into an uncertain weekend on the geopolitical front, and that is limiting the downside for gold. December Comex gold was last down $4.50 at $1,308.00 an ounce. Spot gold was last quoted down $6.50 at $1,307.00. December Comex silver last traded down $0.13 at $19.93 an ounce.

Geopolitics is front and center in the market place Friday morning. Thursday night President Obama authorized air strikes against militants in Iraq, who have thousands of civilians trapped without food or water on a mountain in northern Iraq. Also late Thursday the cease-fire between Israel and Hamas was broken. Hamas is again firing rockets into Israel, and Israel has resumed air strikes on the Gaza strip. The Russia-Ukraine crisis has heated up this week as Russian troops are massed at the Ukraine border.  Reports also said Russian rebels shot down a Ukrainian military jet Thursday. However, news reports as of this writing were saying Russia may be somewhat softening its stance on the Ukraine situation. That helped to put downside price pressure on gold.

Also, some upbeat U.S. economic data just released added some selling pressure to gold. U.S. productivity and labor cost data came in better than expected.

In overnight news, there was important economic data coming out of China. The world’s second-largest economy saw its exports surge in July to score a record monthly trade surplus. China exports in July were up 14.5%, year-on-year, which was double what the market place expected and well above the rise of 7.2% in exports seen in June. China’s imports fell 1.6% in July following a 5.5% rise in June.

U.S. economic data due for release Friday includes preliminary productivity and costs, and monthly wholesale trade inventories.

Wyckoff’s Daily Risk Rating: 8.0 (The market place is today focused on the still-simmering geopolitical matters: the Russia-Ukraine crisis, Iraq and the Gaza strip.)

(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 $1,317.50 versus the previous A.M. fixing of $1,305.25.

Technically, gold bulls and bears are on a level near-term technical playing field but the bulls have momentum on their side. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,328.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,281.00. First resistance is seen at the overnight high of $1,324.30 and then at $1,328.00. First support is seen at the overnight low of $1,310.00 and then at Thursday’s low of $1,303.00.  

December silver futures bears still have the near-term technical advantage as prices are in a four-week-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $20.70 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $19.50. First resistance is seen at the overnight high of $20.25 and then at $20.35. Next support is seen at Thursday’s low of $19.96 and then at this week’s low of $19.835.

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