(Kitco News) - Comex December gold futures are trading lower Monday, on some profit-taking pressure from recent gains and amid a stronger U.S. dollar index. However, losses in gold are being limited by the festering European Union debt crisis that is back on the front burner of the market place Monday morning. December gold last traded down $14.30 at $1,845.10 an ounce. Spot gold last traded down $18.00 an ounce at $1,841.75. December Comex silver last traded down $0.667 at $40.95 an ounce.

The European Union sovereign debt crisis is back in the headlines to start the trading week. There has been no major breakthrough regarding dealing with what is now the EU debt-strapped nation in the spotlight: Greece. There is growing belief Greece is a sinking ship within the EU that cannot be righted. Italian bond yields are also rising, which is another indication of lack of confidence in the EU financial system. The Euro currency has plunged and the U.S. dollar index has rallied as investors flee European Union assets. While gold is seeing some selling pressure Monday, the EU debt crisis is still a major underlying bullish factor for gold.

The U.S. dollar index is trading higher again Monday and hit a fresh six-month high overnight. The greenback bulls have gained good upside near-term technical momentum recently, to now suggest a price uptrend can be sustained. If the U.S. dollar index continues to trade sideways to higher, that would be a bearish underlying factor for the precious metals markets.

Crude oil futures prices are trading weaker Monday, which is also somewhat bearish for gold and silver. Crude oil's recent price action hints prices will trade in a choppy range between $80 and $90 a barrel for the near term. Crude oil will remain an important "outside market" that will influence the precious metals markets.

There were reports overnight coming from some brokers that part of gold's weakness Monday is due to margin calls in other weak markets pulling some money out of the gold market.

If recent history repeats itself, bargain hunters will once again step in to "buy the dip" on perceived bargain hunting in gold.

Here's an important element for all gold traders to monitor closely: If the U.S. stock indexes drop below their August price lows, that would be extremely bearish for U.S. stocks and very likely significantly bullish for safe-haven gold. The U.S. stock indexes are starting off the week on very shaky ground as prices are now hovering not that far above the August lows.

There is no U.S. economic data due for release Monday.

The London A.M. gold fixing was $1,843.00 versus the previous P.M. fixing of $1,851.00.

Technically, December gold futures bulls still have the solid overall technical advantage. Bulls' next upside technical objective is to produce a close above solid technical resistance at the all-time high of $1,923.70. Bears' next near-term downside price objective is closing prices below solid technical support at last week's low of $1,793.80. First resistance is seen at $1,850.00 and then at the overnight high of 1,865.20. First support is seen at the overnight low of $1,828.80 and then at $1,816.20.

December silver futures bulls still have the overall near-term technical advantage. Prices are still in a choppy, nine-week-old uptrend on the daily bar chart. Bulls' next upside price objective is producing a close above strong technical resistance at the September high of $43.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $40.00. First resistance is seen at the overnight high of $41.60 and then at $42.00. Next support is seen at the overnight low of $40.83 and then at last week's low of $40.385.

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By Jim Wyckoff contributing to Kitco News; jim@jimwyckoff.com

Editor’s Note:

Kitco News will provide readers with comprehensive print and video coverage of three-major precious metals market events in New York, Toronto and Montreal during the next two weeks.

First, Kitco News will supply live coverage on Wednesday, Sept. 14, of the CPM Platinum Group Metals Seminar in New York. That will be followed by the Toronto Resource Investment Conference September 15-16, and then the London Bullion Marketing Association meeting in Montreal September 18-20.  

The CPM Group's Platinum Metals Group Seminar Sept. 14 will showcase presentations from some of the leading analysts and investors in the PGM sector. Register to watch the CPM Platinum Group Metals Seminar Live (Free Registration): http://cpmevents.kitco.com/

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