Comex gold futures closed modestly higher and nearer the session high Tuesday, after hitting another fresh two-month low early on. Short covering and fresh bargain-hunting buying interest were featured. August gold closed up $10.40 an ounce at $1,192.30. Spot gold was last quoted up $8.50 at $1,193.00.

The U.S. dollar index was firmer Tuesday and the Euro currency was weaker, which did limit buying interest in gold. Just recently, the gold market and the U.S. dollar index have resumed their inverse trading relationship, while gold has also resumed its generally positive correlation with the Euro currency. Crude oil turned higher as the trading session progressed Tuesday, which also supported buying interest in gold.

Traders are awaiting the stress test results for European Union financial institutions, due out Friday. Some fears about Euro-zone banks and the EU countries' sovereign debt have been allayed recently, ahead of the stress test results. The Committee of European Banking Supervisors is testing 91 banks to see whether the banks can withstand a 3% decline in EU economic growth. The committee will also test for sovereign risk at a level beyond the market conditions experienced during May.

Traders are also awaiting Federal Reserve Chairman Ben Bernanke's testimony on monetary policy in front of Congress Wednesday and Thursday.

News reports Tuesday said Russia's gold reserves increased by 0.9% in June. Russia's central bank said its gold reserves were 22.6 million ounces as of June 1.

In other overnight news, Commerzbank says jewelry demand is likely to increase following the recent drop in gold prices, which should prevent sizeable losses in the gold market. The bank did acknowledge overall investment demand for gold has slipped recently.

The London P.M. fixing was $1,183.00 compared to the previous P.M. fixing of $1,181.00.

From a technical perspective, gold futures bulls have the overall near-term technical advantage. Bulls' next near-term upside technical objective is to produce a close above solid chart resistance at last week's high of $1,218.80, basis August gold. Bears' next near-term downside price objective is closing prices below solid technical support at $1,168.00. First resistance is seen at this week's high of $1,194.70 and then at $1,200.00. Support is seen at $1,185.00 and then at Tuesday's low of $1,175.10. Wyckoff's Market Rating: 6.0.

December Comex silver futures closed up 19.0 cents at $17.79 an ounce Tuesday. Prices closed near the session high on short covering. Prices are still in a four-week-old downtrend on the daily bar chart. The silver bulls have the slight overall near-term technical advantage. The next downside price objective for the bears is closing prices below solid technical support at the June low of $17.335. Bulls' next upside price objective is closing prices above solid technical resistance at last week's high of $18.59 an ounce. First resistance is seen at Tuesday's high of $17.83 and then at $18.00. Next support is seen at this week's low of $17.50 and then at the June low of $17.335. Wyckoff's Market Rating: 6.0.

December N.Y. copper closed up 755 points at 303.70 cents Tuesday. Prices closed near the session high. Copper bears still have the overall near-term technical advantage. A bearish symmetrical triangle pattern is still in place on the daily bar chart. The next downside price objective for the bears is closing prices below solid technical support at the July low of 288.00 cents. Bulls' next upside objective is pushing and closing prices above solid technical resistance at 314.00 cents. First resistance is seen at 305.00 cents and then at last week's high of 309.00 cents. First support is seen at 300.00 cents and then at this week's low of 295.00 cents. Wyckoff's Market Rating: 3.5.

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.