Gold Firmer, Boosted by U.S. Retail Sales Report Miss
New York (Aug 13) Gold prices are modestly higher in early U.S. trading Wednesday. Gold was lifted in the wake of a weaker-than-expected key U.S. economic report, after trading at weaker price levels overnight. A stronger U.S. dollar index that is hovering near a six-month high has limited the upside in gold recently. December Comex gold was last up $2.70 at $1,313.30 an ounce. Spot gold was last quoted up $3.40 at $1,312.50. December Comex silver last traded up $0.13 at $20.10 an ounce.
U.S. retail sales in July were reported unchanged following a 0.2% rise in June. Forecasts were calling for a rise of 0.2% to 0.3% in retail sales. The miss on this key U.S. economic report prompted a modest rally in the gold market.
While there are still geopolitical hotspots in the world that the market place is monitoring, traders this week appear to have a bit more risk appetite. Many market participants are focused on late-summer vacations and other outdoor activities. However, any flare-up will likely jolt traders and investors back into a keener risk-averse posture. I suspect geopolitics will be back on the front burner of the market place sooner rather than later.
In overnight news, European Union industrial production fell 0.3% in June versus May and was unchanged year-on-year. A monthly rise of 0.3% was expected. The EU’s second-quarter GDP estimate is due for release Thursday, and is expected to show a paltry growth rate of 0.1%. Recent EU economic data has been downbeat, to suggest the bloc is teetering on recession again.
Meantime, China’s industrial production was up 9% in July, year-on-year, versus up 9.2% in June. China’s July retail sales were up 12.4% from June and up 12.2% year-on-year. Despite being good numbers, they were both below market expectations.
U.S. economic data due for release Wednesday includes the MBA mortgage applications survey, retail sales, manufacturing and trade inventories, and the weekly DOE liquid energy stocks report.
Wyckoff’s Daily Risk Rating: 6.0 (The market place this week is less 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 $1,309.25 versus the previous P.M. fixing of $1,315.75.
Technically, gold bulls and bears are 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 $1,328.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the August low of $1,281.00. First resistance is seen at the overnight high of $1,315.80 and then at $1,320.00. First support is seen at the overnight low of $1,306.00 and then at $1,303.00.
December silver futures bears have the near-term technical advantage as prices are in a six-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 $20.25 and then at $20.35. Next support is seen at the overnight low of $19.92 and then at last week’s low of $19.835.