Comex gold futures prices are trading slightly lower Wednesday morning, on a downside price correction from recent solid gains that have produced a three-week-old uptrend on the daily bar chart. December gold last traded down $2.50 an ounce at $1,225.80. Spot gold was last quoted down $1.20 at $1,224.00.

The modest profit-taking pressure Wednesday morning is not surprising, amid a lack of fresh, market-moving fundamental news to drive the market so far Wednesday. The U.S. dollar index is trading slightly lower as the greenback bulls are fading this week. This is limiting selling pressure in gold. However, crude oil prices have been trending lower for two weeks, which is an underlying bearish factor for gold. The U.S. stock indexes are trading near steady levels Wednesday morning, and providing no direction to the precious metals markets.

Traders Wednesday will see a light U.S. economic data docket. A weekly MBA mortgage applications survey is released, as well as the weekly petroleum stocks report from the Energy Information Administration. On Thursday there is a heavier slate of U.S. economic data due out.

News reports overnight said the largest gold exchange traded fund, SPDR, on Tuesday reported an increase of 8 metric tons in holdings, to total 1,294 tons.

The London A.M. gold fix was $1,223.00 versus the previous P.M. fixing of $1,226.00.

Technically, the gold market bulls still have some near-term upside technical momentum. Prices are still in a three-week-old uptrend on the daily bar chart. The longer-term charts still fully favor the gold market bulls.

The next near-term upside price objective for the gold market bulls is to push and close December futures prices above solid chart resistance at $1,250.00. The bears' next near-term downside price objective is producing a close in December gold futures below solid chart support at $1,200.00.

For December gold, shorter-term technical resistance is located at this week's high of $1,231.10 and then at $1,240.00. Buy stops likely reside just above those levels. Sell stops likely reside just below chart support at the overnight low of $1,221.70 and then at this week's low of $1,216.20. Today's key near-term Fibonacci pivot level for December gold: $1,228.00.

Comex silver futures are weaker Wednesday morning, on a corrective pullback from recent gains. December silver last traded down 15.5 cents at $18.495 an ounce.

The next near-term upside price objective for the silver market bulls is to push and close December Comex futures prices above solid chart resistance at $19.00 an ounce. The next downside price objective for the silver bears is to push and close December silver prices below solid technical support at last week's low of $17.855.

December silver finds shorter-term technical resistance at this week's high of $18.675 and then at the August high of $18.75. Buy stops likely reside just above those levels. Shorter-term technical support for December silver is located at the overnight low of $18.42 and then at $18.25. Sell stops are likely placed just below those levels. Today's key Fibonacci pivot level for December silver futures is located at $18.24.

By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

Editor’s Note: Meet the Kitco News Team at the upcoming Kitco Metals eConference September 12-13, 2010. A not-to-be missed event featuring Ron Paul, Marc Faber and other industry heavyweights. The eConference is free with Pre- Registration www.kitcoeconf.com.

****

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.