Comex gold futures closed slightly lower Wednesday on a profit-taking pullback after hitting another fresh two-month high early on. A rallying U.S. stock market amid some better risk appetite among investors did pull some buying interest away from gold Wednesday. December gold last traded down $3.90 an ounce at $1,246.40. Spot gold was last quoted down $2.90 at $1,245.25.

The U.S. stock indexes posted solid rallies Wednesday following a better-than-expected ISM reading on the U.S. manufacturing sector. Solidly lower U.S. Treasury bond and note futures prices also supported the notion that investor risk appetite did increase Wednesday. Still, the months of September and October have historically seen more turbulence in the stock, financial and currency markets, which is an underlying supportive factor for gold. The U.S. stock indexes are still in a technically weak posture and Wednesday's upside price action was so far just short covering in a bear market in stocks.

A strong down day for the U.S. dollar index did limit selling interest in gold futures Wednesday.

Precious metals traders are awaiting Friday's U.S. employment report, which is expected to show the key non-farm payrolls figure to be down 123,000 in August, following a decline of 131,000 jobs in July. The unemployment rate is forecast to come in at 9.6% from the July reading of 9.5%. Look for more active trading in the precious metals and other markets in the immediate aftermath of Friday morning's jobs data.

The London P.M. gold fixing was $1,246.50 versus the previous P.M. fixing of $1,246.00 an ounce.

From an important technical perspective, December gold futures prices closed nearer the session low Wednesday. Prices on Tuesday posted a significantly bullish monthly high close. Bulls still have some upside technical momentum and are still poised to challenge the all-time high of $1,270.60, scored in June. Gold market bulls still have the solid overall near-term technical advantage. Prices are in a five-week-old uptrend on the daily bar chart. Bulls' next near-term upside technical objective is to produce a close above solid chart resistance at the all-time high of $1,270.60. Bears' next near-term downside price objective is closing prices below solid technical support at this week's low of $1,233.50. First resistance is seen at $1,250.00 and then at Wednesday's high of $1,256.60. Support is seen at Wednesday's low of $1,244.10 and then at $1,240.00. Wyckoff's Market Rating: 7.5.

December silver futures closed down 4.7 cents at $19.385 an ounce Wednesday. Prices closed nearer the session low on profit taking after hitting a fresh 2.5-month high early on. Prices Tuesday also closed at a bullish monthly high close. The key "outside markets" were in a bullish posture for silver Wednesday, as the U.S. dollar index was lower, while crude oil and U.S. stock index prices were solidly higher. Silver bulls still have the solid near-term technical advantage. The next downside price objective for the bears is closing prices below solid technical support at this week's low of $18.86. Bulls' next upside price objective is closing prices above solid technical resistance at the June high of $19.55 an ounce. First resistance is seen at $19.55 and then at $19.75. Next support is seen at Wednesday's low of $19.32 and then at $19.20. Wyckoff's Market Rating: 7.5.

December N.Y. copper closed up 990 points at 346.90 cents today. Prices closed near the session high today and hit a fresh four-month high. The key "outside markets" were in a bullish posture for copper Wednesday, as the U.S. dollar index was lower, while crude oil and U.S. stock index prices were solidly higher. The bulls have the near-term technical advantage and have upside near-term technical momentum to suggest more gains are in the offing in the near term. Bulls' next upside objective is pushing and closing prices above solid technical resistance at 350.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 330.00 cents. First resistance is seen at Wednesday's high of 348.60 cents and then at 350.00 cents. First support is seen at 345.00 cents and then at 343.05 cents. Wyckoff's Market Rating: 7.0.

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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