In early U.S. trading Monday, gold prices are slightly higher, on a short-covering recover after reaching close to a three-year low of $1,179.40 in August Comex futures on Friday. Major uprising in Egypt is moreover encouraging of safe-haven demand for gold to begin the trading week. Spot gold was last quoted up $0.40 at $1,236.25. August gold was last up $11.60 at $1,235.30 an ounce.
The HSBC manufacturing PMI for China came in at 48.2 in June versus 49.2 in May. The HSBC June PMI data for South Korea, Taiwan and Indonesia also came in weaker on Monday. More than expected China manufacturing data released Monday. The purchasing managers’ index came in at 50.1 in June versus 50.8 in May. A reading over 50.0 recommends growth in the manufacturing sector. Japan’s Tankan survey presented improvement in business sentiment in the recent quarter. Several Asian stock markets dropped on the mostly weaker economic data released Monday. Japan’s stock market rose slightly on the Tankan data.
This week is busy of significant economic data worldwide, regardless of the U.S. Independence holiday on Thursday, which will obviously make many Americans take much of the week off. The U.S. jobs report is out Friday morning, whereas the Bank of England and European Central Bank monthly meetings are on Thursday.
The Egyptian unrest is in the news headlines again. Major riots are occurring in all over Egypt; Cairo, Alexandria, Suez, Port-Said and even in rural areas, to call the President, backed by the Muslim Brotherhood (MB), to step-down on the background of threatening the media, free speech and his political opposition with arrests in his last public speech few days ago. The failure of the government to provide electricity and gasoline, plus the general setback in the national economy drove the public to go on the streets for demonstrating their anger and frustration from the MB administration. The Egyptian pound lost around 13% of its value during the past year, and the stock market lost 10.97% on the MB running the country’s affairs. Despite the gold decline around the world in the past 6-months, the price of gold in the Egyptian local market didn’t decline as much; the weak currency and the skyrocketing prices of basic commodities stole gold’s thunder in Egypt. Gold could be seeing some fresh safe-haven demand because of violence in Egypt. If this situation increases, gold could experience greater safe-haven demand surface.
Monday morning the U.S. dollar index, is moderately lower, on some minor profit gaining after hitting a four-week high Friday. The USD bulls on their side still have technical momentum, which is a bearish primary factor for the precious metals markets.
The U.S. economic data released Monday contains the Global manufacturing PMI, the U.S. manufacturing PMI, the ISM manufacturing report and construction spending.
The London A.M. gold fix is $1,243.50.
Technically, without a clear change, the gold market bears remain in strong near-term technical command. The upcoming main, longer-term downside price targets are $1,100 and then at $1,027 for nearby Comex futures. The $1,088 price level for nearby Comex gold futures marks a 50% Fibonacci retracement level of the up-trending price move from the 2001 low to the 2011 record high. August gold futures prices are in an 8-month-old downtrend on the daily bar chart. The gold bears’ next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,179.40. The gold bulls’ next upside near-term price objective is to produce a close above technical resistance at $1,250.00. The first resistance is sighted at the overnight high of $1,247.40 and then at $1,250.00, as for the first support is sighted at the overnight low of $1,224.10 and then at $1,200.00.