Comex gold futures prices are modestly higher in early trading Wednesday, with prices hitting a fresh 10-week high overnight and now within easy striking distance of the all-time high scored in June. December gold last traded up $2.00 an ounce at $1,261.30. Spot gold was last quoted up $4.40 at $1,260.00.

Fresh worries this week about the health of the banking system in the European Union have been supporting safe-haven buying interest in gold. Bond yields in Ireland are rising this week, which has also spooked investors a bit. The Wall Street Journal this week ran a story questioning the viability of the stress tests performed on EU financial institutions earlier this summer.

The U.S. dollar index is trading weaker Wednesday morning, on a corrective pullback following strong gains posted on Tuesday. U.S. stock indexes are firmer and crude oil prices are weaker early Wednesday. None of these key "outside markets" are providing much guidance for gold traders Wednesday morning.

U.S. economic reports due out Wednesday include the Federal Reserve's beige book, the MBA mortgage applications survey, the Goldman Sachs chain store sales index, Johnson-Redbook retail sales index and consumer credit data.  The afternoon release of the beige book will likely garner the most trader attention Wednesday.

The London A.M. gold fixing was $1,258.00 versus the previous London P.M. fixing of $1,256.75.

Technically, Comex gold bulls still have the solid overall near-term technical advantage. Prices are still in a six-week-old uptrend on the daily bar chart. There are still no early technical clues to suggest a market top is close at hand.

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 the contract and all-time record high of $1,270.60. The bears' next near-term downside price objective is producing a close in December gold futures below solid chart support at last week's low of $1,233.50.

For December gold, shorter-term technical resistance is located at the overnight high of $1,262.80 and then at $1,270.60. Buy stops likely reside just above those levels. Sell stops likely reside just below chart support at the overnight low of $1,256.80 and then at $1,250.00. Today's key near-term Fibonacci pivot level for December gold: $1,252.00.

Comex silver futures are higher Wednesday morning and hit a fresh 25-month high overnight. Silver is riding the bullish coattails of gold, at present. December silver last traded up 13.1 cents at $20.045 an ounce. The silver bulls still have the solid overall near-term technical advantage. Silver will continue to generally follow the lead of the gold market.

The next near-term upside price objective for the silver market bulls is to produce multiple daily closes above major psychological resistance at $20.00 an ounce in December Comex futures. 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 $18.86

December silver finds shorter-term technical resistance at $20.15 and then at $20.25. Buy stops likely reside just above those levels. Shorter-term technical support for December silver is located at the overnight low of $19.82 and then at $19.75. Sell stops are likely placed just below those levels. Today's key Fibonacci pivot level for December silver futures is located at $19.61.

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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