Comex gold prices are trading higher and hit another new all-time record high of $1,351.00 an ounce in December futures Wednesday morning. The wave of investment demand for the precious yellow metal appears to be picking up significant momentum. December Comex gold last traded up $7.70 an ounce at $1,348.00. Spot gold was last quoted up $6.20 at $1,347.50.

The U.S. dollar index is trading near steady Wednesday, but did hit another fresh 8.5-month low overnight. The Euro currency did hit some turbulence overnight as reports said Fitch has just downgraded Ireland's credit rating.

Most agree gold's latest surge has been due in major part to the slumping greenback, as many investors believe a fresh round of quantitative easing of U.S. monetary policy is in the offing, possibly in early November. That's strongly dollar-bearish. The Bank of Japan and the Reserve Bank of Australia central banks have this week announced they are adopting more stimulative monetary policies, which ostensibly "sets the table" for a U.S. stimulative package soon. If and when the U.S. Federal Reserve does announce a fresh monetary stimulus package, I would not be surprised to see the U.S. dollar index actually rally, and it could even put in at least a near-term low. Reason: Traders and investors are already factoring into the markets' pricing structure the much-expected U.S. quantitative easing. Once that easing is officially announced, traders may well adopt a "buy the rumor, sell the fact" scenario, a phenomenon which is widely known by veteran market watchers. In this case, it would actually be a "sell the rumor, buy the fact" scenario. Gold investors should be aware of this distinct possibility, as gold prices could see a significant downside price correction if the U.S. dollar index does put in a near-term market bottom.

The major U.S. economic report this week is Friday's jobs report. Look for an active trading affair in many markets in the immediate aftermath of Friday morning's employment report. A weak jobs report would provide the gold market bulls with another solid clue that the Fed will print more dollars in an effort to boost the U.S. economy. A stronger-than-expected jobs report would likely provide a lift for the U.S. dollar index and be bearish for the gold market.

U.S. economic data due out Wednesday includes the weekly MBA mortgage applications survey and the ADP national employment report.

The London A.M. gold fixing was $1,347.00 versus the previous London P.M. fixing of $1,330.50.

From a technical perspective in December Comex gold, the shorter-term and longer-term price trends in the market have been and continue to be up. Gold market bulls still have the strong overall near-term and longer-term technical advantage and have gained more power this week. While there are still no early technical clues to hint that a major market top is close at hand in gold, the market has now become a bit over-extended on the upside, on a near-term technical basis. A corrective pullback in the near term would not be surprising, nor would it be unhealthy for this mature bull market.  

Bulls' next upside technical price objective is to produce a close above psychological resistance at $1,375.00 in December gold. Bears' next near-term downside price objective is closing prices below solid technical support at this week's low of $1,313.30. First resistance is seen at the overnight all-time record high of $1,351.00 and then at $1,360.00. Support is seen at the overnight low of $1,340.00 and then at $1,330.00. Today's near-term Fibonacci support/resistance level: $1,337.00.

Comex silver futures are trading higher Wednesday as prices hit another fresh 30-year high overnight. December silver last traded up 15.8 cents at $22.895 an ounce. Silver bulls have the solid near-term technical advantage at present. Prices are in a steep 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. However, the silver market is also technically short-term overbought and due for a corrective pullback in prices soon. The next downside price objective for the bears is closing prices below solid technical support at this week's low of $21.81. Bulls' next upside price objective is producing a close above solid technical resistance at $24.00 an ounce. First resistance is seen at $23.00 and then at the overnight high of $23.09. Next support is seen at the overnight low of $22.78 and then at $22.50. Today's near-term Fibonacci support/resistance level: $22.60.

By Jim Wyckoff of Kitco News; jwyckoff@kitco.com

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