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(Kitco News) - Comex gold futures prices ended the U.S. day session solidly lower and nearer the daily low Thursday, after early on scoring another fresh all-time record high of $1,684.90, basis December futures. Long liquidation, much of which was profit taking and margin-call selling, hit the gold market in late-morning dealings. The market place was on edge Thursday, which initially supported the precious metals. However, crude oil prices went into a free fall and the U.S. dollar index soared, which ultimately led to panic-type selling in most markets, including gold and silver. December gold last traded down $11.00 at $1,655.00 an ounce. Spot gold last traded up $6.80 an ounce at $1,668.50. December Comex silver last traded down $2.74 at $39.045 an ounce.

The U.S. dollar index traded sharply higher Thursday and got a somewhat surprising boost when the Bank of Japan intervened in the foreign exchange market overnight to pressure the yen. As the day wore on, flight-to-safety moves also supported the greenback. The strong rebound in the dollar index put downside price pressure on most commodity markets Thursday. The dollar index bulls on Thursday gained fresh upside near-term technical momentum.

Crude oil prices careened lower Thursday and hit a fresh eight-month low, amid the world economic slowdown worries and the much stronger U.S. dollar. Crude oil saw serious near-term chart damage inflicted Thursday, is now an underlying bearish factor for the precious metals, especially silver. Crude will continue to be a major "outside market" force for the precious metals.

The European Union sovereign debt crisis is once again on the front burner of the market place. As the day wore on Thursday, worries intensified the crisis could erupt into a worldwide debt contagion. Italian and Spanish bond yields this week hit Euro-era record highs. The EU debt situation is much more serious than the U.S. debt woes. The EU debt situation could turn very ugly very quickly, and many in the market place Thursday realized this.

Investors and traders worldwide are also taking note of the prospects of a "double-dip" worldwide economic recession following a spate of weak economic data coming from the major world economies. Friday's U.S. jobs report is anxiously awaited, and most traders reckon that report will bolster notions the U.S. economy is sputtering. Look for a very active trading day in most markets on Friday.

The London P.M. gold fixing was $1,679.50 versus the previous P.M. fixing of $1,669.25.

Technically, December gold futures prices closed nearer the session low Thursday. Prices reversed course in late morning to drop sharply and produce a bearish "outside day" down on the daily bar chart. If there is strong follow-through selling pressure on Friday, which would also produce a bearish weekly low close, then a more significantly bearish "key reversal" down would be confirmed on the daily chart. That would be one early technical clue that a near-term market top is in place. The gold market had become short-term overdone on the upside and a corrective pullback was due. Gold bulls still have the strong overall near-term and longer-term technical advantage. Prices are still in a six-month-old uptrend on the daily bar chart and in a 10-year-old uptrend on the monthly chart. Bulls' next near-term upside technical objective is to produce a close above major psychological resistance at $1,700.00. Bears' next near-term downside price objective is closing prices below solid technical support at $1,610.00. First resistance is seen at $1,664.50 and then at $1,675.90. First support is seen at Thursday's low of $1,642.20 and then at $1,637.50. Wyckoff's Market Rating: 8.5.

December silver futures prices closed nearer the session low Thursday after hitting another fresh three-month high of $42.31 early on. Prices then reversed course in late morning to drop sharply and produce a bearish "outside day" down on the daily bar chart and hit a fresh three-week low. The key "outside markets" were very bearish for silver Thursday, as the U.S. dollar index was sharply higher and the crude oil market was sharply lower. Some near-term chart damage was inflicted in silver Thursday. A bearish weekly low close on Friday would produce more chart damage to then suggest a near-term market top is in place. The silver bulls do still have the overall technical advantage, but a four-week-old uptrend on the daily bar chart was negated Thursday. Bulls' next upside price objective is producing a close above solid technical resistance at today's high of $42.31 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $37.00. First resistance is seen at $39.50 and then at $40.00. Next support is seen at Thursday's low of $38.50 and then at $38.00. Wyckoff's Market Rating: 5.5.

December N.Y. copper closed down 990 points 425.05 cents Thursday. Prices closed near the session low and hit a fresh five-week low. Serious near-term technical damage was inflicted Thursday to suggest that a near-term market top is in place. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 450.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 415.00 cents. First resistance is seen at 427.50 cents and then at 430.00 cents. First support is seen at Thursday's low of 425.00 cents and then at 422.50 cents. Wyckoff's Market Rating: 5.0.

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

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