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(Kitco News) - Comex December gold futures prices ended solidly lower Monday, and in the middle of a wide daily trading range, amid more margin-call selling and the liquidation of weak long positions. Prices early Monday spiked to a fresh 2.5-month low of  $1,535.00 an ounce. The late-Friday announcement that the CME Group once again has raised margin requirements for gold and silver futures added to strong downside price pressure that has hit the precious metals markets recently and has produced serious near-term chart damage. December gold last traded down $41.70 an ounce at $1,598.10 an ounce. Spot gold last traded down $61.30 an ounce at $1,596.50. December Comex silver last traded down $0.006 at $30.095 an ounce.

Gold prices careened sharply lower in Asian trading overnight but then made a strong rebound from those early lows. Many traders in many markets have adopted a "when in doubt, get out" mentality due to the keener uncertainty in the market place at present. Margin calls from brokers to traders are also forcing liquidation in the precious metals. Veteran market watchers know that trading markets--especially those shorter-term traders (as opposed to the longer-term buy-and-hold investors)--can become a "money game" when markets start moving wildly on a daily basis and the traders are forced to liquidate positions due to margin calls and extreme price volatility. That's when overall market fundamentals are at least temporarily ignored by traders. Being on the wrong side of margin call liquidation and panic selling can be an ugly part of being involved in shorter-term trading.

The world stock markets saw some stabilization Monday, following recent strong selling pressure. The European Union sovereign debt situation remains a major issue in the market place. There was no major breakthrough on the crisis during weekend meetings among EU and IMF officials. The EU debt situation had been an underlying bullish underlying factor for gold. However, it now appears likely that the present problems regarding EU debt have been factored into present market prices and it will take a major new development on that front to significantly move markets.

The U.S. dollar index is traded steady to weaker Monday afternoon after hitting a fresh 7.5-month high overnight. The dollar index bulls have the solid near-term technical advantage and the stronger U.S. dollar index is a major bearish factor for the gold market at present.

Crude oil futures prices are trading slightly higher Monday afternoon after hitting a fresh six-week low of $77.11 a barrel overnight. Crude oil bears still have some downside momentum and that's also a bearish factor for the precious metals markets.

The London P.M. gold fixing was $1,598.00 versus the previous P.M. fixing of $1,689.00.

Technically, December gold futures prices closed near mid-range Monday in another extremely volatile day. Prices hit a fresh 2.5-month low of $1,535.00 early on. Serious near-term technical damage has been inflicted in gold recently. Prices are in a steep three-week-old downtrend on the daily bar chart and a bearish double-top reversal pattern has formed on the daily chart. Bulls' next upside technical objective is to produce a close above solid technical resistance at $1,705.40. Bears' next near-term downside price objective is closing prices below strong technical support at Monday's low of $1,535.00. First resistance is seen at $1,625.00 and then at $1,650.00. First support is seen at $1,575.00 and then at $1,550.00. Wyckoff's Market Rating: 4.0.

December silver futures prices closed nearer the session high Monday after hitting a fresh 10-month low early on. Very serious near-term and longer-term chart damage has been inflicted recently. However, Monday's high-range close suggests the bears may have become exhausted at the lower price levels as selling interest dried up at Monday's low of $26.15 and prices then rebounded strongly. If there is follow-through buying interest on Tuesday, then it would be a clue that a near-term market bottom is in place. However, at present prices are still in a steep six-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is producing a close above strong technical resistance at $32.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at today's low of $26.15. First resistance is seen at Monday's high of $30.97 and then at $32.00. Next support is seen at $28.00 and then at $28.00. Wyckoff's Market Rating: 3.0.

December N.Y. copper closed up 3,10 points 331.10 cents Monday. Prices closed nearer the session high after hitting a fresh 14-month low early on. Very serious near-term chart damage has occurred recently. However, today's high-range close suggests the bears may have become exhausted at today's lower price levels as selling interest dried up at today's low of 307.15 and prices then rebounded strongly. If there is follow-through buying interest on Tuesday, then it would be a clue that a near-term market bottom is in place.  Copper bears do still have the strong overall near-term technical advantage as a steep four-week-old downtrend is in place on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 350.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at Monday's low of 307.15 cents. First resistance is seen at Monday's high of 335.65 cents and then at 340.00 cents. First support is seen at 325.00 cents and then at last week's low of 321.50 cents. Wyckoff's Market Rating: 2.0.

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By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com

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