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Jim Wyckoff A.M. Kitco Metals Roundup: Comex Gold Trades Near Steady; Fresh News Regarding EU Debt Crisis Awaited

08 November 2011, 8:23 p.m.
By Jim Wyckoff
Of Kitco News
http://www.kitco.com/

(Kitco News) - Comex December gold futures prices are trading near steady in early U.S. trading Tuesday. The market is pausing as traders await fresh developments from the ongoing European Union sovereign debt crisis. The precious yellow metal is flirting with psychological resistance at the $1,800.00 level. December gold last traded up $1.00 at $1,792.10 an ounce. Spot gold last traded down $5.10 an ounce at $1,791.00. December Comex silver last traded down $0.023 at $34.805 an ounce.

Underlying safe-haven investor demand is still limiting selling interest in gold Tuesday morning, but the market is pausing after recent strong gains that saw prices hit a fresh six-week high of $1,799.90 an ounce in late trading Monday. Developments on the European Union financial and sovereign debt crisis front include an Italian government vote on its budget. This vote, scheduled for later Tuesday, will help the market place determine if Italian leader Berlusconi can remain in power. Italian bond yields are at Euro-era record highs this week, which is a bad sign for prospects of the third-largest EU economy pulling itself out of the debt quagmire in which it’s presently stuck. Traders and investors worldwide are pondering what will be next in the EU debt crisis saga, but most believe it won’t be positive for the market place. This heightened uncertainty remains a bullish underlying factor for the precious metals markets, and especially gold.

The U.S. dollar index is trading slightly lower Tuesday morning, also in a pause mode.
The dollar index bulls have gained some upside near-term technical momentum recently. Crude oil prices are higher Tuesday morning and hit a fresh three-month high overnight, and that’s an underlying bullish “outside market” force for the precious metals. Crude oil prices remain in a near-term uptrend.

U.S. economic data due for release Tuesday includes the NFIB index of small business optimism, the weekly Goldman Sachs chain store sales index, the Johnson Redbook weekly retail sales report and the IDB/TIPP economic optimism index.

The London A.M. gold fixing was $1,794.00 versus the previous P.M. fixing of $1,782.00.

Technically, December gold bulls have the solid overall near-term technical advantage and have gained upside momentum recently. Prices are in a six-week-old uptrend on the daily bar chart and hit a fresh six-week high Monday. Bulls' next upside technical objective is to produce a close above psychological resistance at $1,800.00, which could easily occur Tuesday. Bears' next near-term downside price objective is closing prices below psychological support at $1,700.00. First resistance is seen at $1,800.00 and then at $1,825.00. First support is seen at the overnight low of $1,785.10 and then at $1,775.00.

December silver futures bulls have the overall near-term technical advantage. A six-week-old uptrend is in place on the daily bar chart. Silver bulls' next upside price objective is producing a close above technical resistance at the October high of $35.70 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $32.105. First resistance is seen at $35.00 and then at $35.50. Next support is seen at the overnight low of $34.505 and then at $34.00.

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By Jim Wyckoff of Kitco News; jwyckoff@kitco.com

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