Gold Weaker On Corrective Pullback From Monday's Sharp Gains

NEW YORK (July 23) Gold prices are modestly lower in early U.S. trading Tuesday, on a downside technical correction from the strong gains Monday that propelled the market to a four-week high. Still, the gold and silver market bulls on Monday gained enough upside technical momentum to begin to suggest near-term market lows are in place. August gold was last down $6.10 at $1,329.90 an ounce. Spot gold was last quoted down $4.50 at $1,331.25. September Comex silver last traded down $0.299 at $20.205 an ounce.

Somewhat adding to the mildly negative daily tone in gold Tuesday are the reports late Monday that India’s government will add further restrictions on the importation of gold, in order to reduce its current account deficit.

It’s another quiet, summertime day in the market place as U.S. trading is set to get under way. Overnight, Asian stock markets were supported on reports that China’s premier said China’s economic growth needs to be above a 7% annual pace in order to reach China’s goal of doubling the size of its economy this decade. Last week, China’s second-quarter GDP was reported at a 7.5% annual clip. The premier’s comments suggested China will focus more on economic stimulus. A key Chinese manufacturing report is due out Wednesday. European stocks were also lifted modestly on the China news.

The U.S. dollar index is firmer Tuesday morning on tepid short covering. However, the greenback bears still have the overall near-term chart advantage to suggest the dollar index has put in a market top. Meantime, Nymex crude oil futures prices are lower on profit taking. However, the crude oil bears still have the overall near-term technical advantage. These two key “outside markets” are in a bearish daily posture for the precious metals markets Tuesday.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the monthly house price index, and the Richmond Fed business survey.