Comex gold futures prices closed higher and nearer the session high on Thursday, supported by short covering and some fresh bargain-hunting buying interest at lower price levels. A solidly lower U.S. dollar index and higher crude oil prices were also underlying supportive factors for the gold market. December gold closed up $8.80 an ounce at $1,171.20. Spot gold was last quoted up $4.50 at $1,168.50.

Gold futures prices on Wednesday hit a fresh three-month low of $1,159.30, basis December Comex futures, and have since seen quieter trading action and a pause. This pause does not favor the gold market bulls.

Reports continue to say demand for physical gold is good at the lower price levels, which is keeping a price floor under the market, at least for now. However, wire service reports overnight also said investor demand for gold via exchange traded funds (ETF's) continues to wane. SPDR Gold Shares holdings dropped by 18.55 metric tonds Wednesday, to 1,282.38 tons.

The overall postures of the commodity markets and the U.S. and European stock markets does suggest investor risk appetite is on the upswing, which is an underlying bearish factor for gold, as it takes away safe-haven investment demand for the yellow metal.

The London P.M. fixing was $1,162.50 compared to the previous P.M. fixing of $1,157.00.

From an important technical perspective, December gold futures are pausing after Tuesday's bigger losses. This pause is not bullish and suggests the bears are just resting and could make another run to the downside in the near term. Serious near-term technical damage has been inflicted this week. Prices are still in a six-week-old downtrend on the daily bar chart. Bears' next near-term downside price objective is closing prices below solid technical support at $1,150.00. Bulls' next near-term upside technical objective is to produce a close above solid chart and psychological resistance at $1,200.00. First resistance is seen at Thursday's high of $1,172.00 and then at $1,178.80. Support is seen at this week's low of $1,159.30 and then at $1,155.00. Wyckoff's Market Rating: 5.0.

December silver futures closed up 18.6 cents at $17.68 an ounce Thursday. Prices closed nearer the session high and saw short covering following recent losses. A weaker U.S. dollar and higher crude oil prices Thursday also supported the silver market. Silver prices are still in a six-week-old downtrend on the daily bar chart. 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  $18.335 an ounce. First resistance is seen at $17.775 and then at $18.00. Next support is seen at Thursday's low of $17.53 and then at this week's low of $17.40. Wyckoff's Market Rating: 5.0.

December N.Y. copper closed up 395 points at 330.60 cents Thursday. Prices closed near the session high and hit a fresh three-month high. Copper bulls have the overall near-term technical advantage and have gained fresh upside technical momentum this week. Prices are in a seven-week-old uptrend on the daily bar chart. The next downside price objective for the bears is closing prices below solid technical support at 314.00 cents. Bulls' next upside objective is pushing and closing prices above solid technical resistance at 342.50 cents. First resistance is seen at Thursday's high of 331.70 cents and then at 335.00 cents. First support is seen at 327.50 cents and then at Thursday's low of 325.30 cents. Wyckoff's Market Rating: 6.5.

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.

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