Comex August gold futures fell to a fresh three-week low of $1,567.20 an ounce Thursday. The yellow-metal bulls have quickly faded following anemic assessments coming from the two largest economies in the world, the U.S. and China.
Most of the marketplace was disappointed with the results of the U.S. Federal Reserve's Federal Open Market Committee meeting Wednesday. While most expected the Operation Twist, the U.S. securities-buying operation, would be extended. The significantly more downbeat assessment of the U.S. economy from the Fed was a surprise that sent fresh shudders through the commodity futures markets.
Then overnight, China's preliminary HSBC Manufacturing Purchasing Managers' Index dropped in June to a fresh seven-month low, continuing a string of weak economic data coming from the world's second-largest commodity-consuming nation.
Nymex crude oil futures dropped below $80 a barrel, leading a raw commodity futures market downturn. At present, gold is choosing to act more like a risk asset, for which the rest of the raw commodity markets are also categorized.
For the moment, the FOMC and China manufacturing news have overshadowed the festering European Union sovereign debt crisis. It's likely the EU debt crisis will soon raise its ugly head again, which could be just what the gold market bulls need. Gold has behaved less like a risk asset and more like a safe-haven asset, and has seen keener investment demand, when the EU debt crisis is on the front burner of the market place and at a medium boil.
From an important technical chart perspective, August gold futures prices are presently trading in a choppy range on the daily chart, bound by solid overhead resistance at the June high of $1,642.40, and by strong technical support at the May low of $1,529.30. Look for more choppy and sideways price action on the charts until gold prices break out of the aforementioned trading range. The direction in which gold prices do break out of that trading range will very likely be the direction of the next near-term price trend in the market.