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A.M. Kitco Metals Roundup: Comex Gold Weaker but Up from Early Low amid “Risk-Off” Day in Market Place Friday June 08, 2011 8:14 AM

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By Jim Wyckoff

Comex gold futures prices are weaker but trading nearer the session high in early U.S. trading Friday. It’s a risk-off trading day in the market place, heading into yet another uncertain weekend. The key outside markets are in a bearish posture for the precious metals Friday, as the U.S. dollar index is solidly higher and crude oil prices are sharply lower. August gold last traded down $6.50 at $1,581.50 an ounce. Spot gold was last quoted down $7.80 an ounce at $1,581.25.  July Comex silver last traded down $0.229 at $28.30 an ounce.

It’s a solid “risk-off” day in the market place Friday morning, heading into another weekend that could see important developments occur in the European Union and China by Monday morning. There are several Chinese economic indicators due for release over the weekend. On the EU front, reports overnight said Greece’s economy is moving into deeper recession, recent economic data show, ahead of upcoming Greek elections. The Fitch ratings agency has downgraded Spain’s sovereign credit rating by three notches as EU leaders are set to hold a teleconference regarding Spain this weekend. There are fresh reports Spain is seeking an EU bailout.

Asian stocks were down overnight following Fed Chairman Bernanke’s speech on Thursday that disappointed many traders and investors due to his failure to spell out a fresh monetary easing package. Once again, traders who were anticipating those lazy, hazy days of summer are finding the market place leaning toward a summer of discontent.

The U.S. dollar index is trading solidly higher Friday morning on fresh safe-haven demand. The dollar index bulls still have the solid overall near-term technical advantage. Meantime, Nymex crude oil futures prices are sharply lower. Crude oil remains in a fully bearish overall fundamental and technical posture. These two key outside markets have been in an overall bearish posture for the precious metals for several weeks.

The London A.M. gold fix is $1,576.00 versus the previous London P.M. fixing of $1,606.00.

U.S. economic data due for release Friday is light and includes the trade in goods and services report, and wholesale trade data.

Technically, gold futures bulls have faded badly in a hurry, following Thursday’s big losses. Bears have regained the slight near-term technical advantage in gold. The gold bulls’ next upside price breakout objective is to produce a close above psychological resistance at $1,600.00. Bears’ next near-term downside price objective is closing prices below solid technical support at the May low of $1,529.30. First resistance is seen at the overnight high of $1,593.60 and then at $1,600.00. First support is seen at $1,575.00 and then at the overnight low of $1,556.40.

July silver futures bulls have also faded quickly after prices Wednesday hit a four-week high. Bulls’ next upside price breakout objective is closing prices above major psychological resistance at $30.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $26.50. First resistance is seen at the overnight high of $28.65 and then at $29.00. Next support is seen at the overnight low of $27.91 and then at $27.50.