(Kitco News) - Comex December gold futures prices ended the U.S. day session sharply lower and near the daily low Tuesday. The bearish forces of a firmer U.S. dollar index and lower crude oil prices trumped safe-haven investor demand due to weaker world stock markets Tuesday. Many traders and investors are presently scratching their heads at the recent erratic, highly unpredictable daily price action in gold. December gold last traded down $52.00 an ounce at $1,605.70 an ounce. Spot gold last traded down $57.10 an ounce at $1,604.25. December Comex silver last traded down $1.285 at $29.51 an ounce.

Traders and investors closely monitored U.S. Federal Reserve Chairman Ben Bernanke's speech on the economy before the Joint Economic Committee Tuesday morning. Some attributed gold's accelerated selling pressure to Bernanke's remarks that inflation remains and will remain subdued. However, that assessment by the Fed chief is certainly nothing new or unexpected. The Fed reiterated at a recent FOMC meeting that the U.S. central bank intends on keeping interest rates extremely low for an extended period of time. What the gold market and other commodity markets are more likely worried about at present is price deflation, amid falling commodity market prices and worries about worldwide recession. Bernanke's downbeat assessment of the U.S. and world economies could have fanned the flames of deflationary worries. Deflation is the archenemy of all commodity markets, including precious metals. But it could also be argued that Bernanke's downbeat economic statements should have been supportive to gold because it underscores the very shaky nature of the world's currency values and the world's economies. Alas, such is the fickle nature of the gold market on any given day recently.

U.S., European and Asian stock markets were under pressure again Tuesday, due to the European Union sovereign debt crisis and the growing reality of a credit default by Greece. This situation has taken a turn for the worse this week as Greece will apparently not meet its deficit targets this year. This has prompted more scrambling by EU and IMF officials, including rescheduling of meetings that are raising investor anxiety even more. On Monday the gold market benefited from the aforementioned situation, but on Tuesday gold sold off as traders were focusing more on the stronger dollar and weaker crude oil prices. Still, the EU debt crisis is overall gold market bullish and bolsters notions gold continues to be a "world currency" for many investors worldwide.

The U.S. dollar index traded firmer Tuesday and hit another fresh 7.5-month high. The dollar index bulls have the solid overall near-term technical advantage, which has been a major underlying bearish factor for the precious metals recently.

Crude oil futures prices were lower Tuesday and hit a fresh 16-month low. Crude oil bulls are gaining more downside technical momentum. If crude oil continues to trend lower that would be a bearish clue for most commodity markets, including gold and silver.

The London P.M. gold fixing was $1,638.00 versus the previous P.M. fixing of $1,655.50.

Technically, December gold futures prices closed near the session low Tuesday and scored a bearish "outside day" down on the daily bar chart, whereby the high was higher and low was lower than the previous day's trading range. Gold market bears have gained the near-term technical advantage. A bearish pennant pattern has formed on the daily bar chart. Prices are also still in a four-week-old downtrend on the daily bar 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 the September low of $1,535.00. First resistance is seen at $1,625.00 and then at $1,650.00. First support is seen at $1,600.00 and then at $1,585.00. Wyckoff's Market Rating: 4.0.

December silver futures prices closed nearer the session low Tuesday. Prices were pressured by bearish "outside markets"--a firmer U.S. dollar index and lower crude oil prices. Prices are also in a six-week-old downtrend on the daily bar chart. A bearish pennant pattern has also formed on the daily bar chart for silver. Silver bulls' next upside price objective is producing a close above strong technical resistance at last week's high of $33.585 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at last week's low of $26.15. First resistance is seen at $30.00 and then at this week's high of $31.43. Next support is seen at $29.09 and then at $28.00. Wyckoff's Market Rating: 3.0.

December N.Y. copper closed down 685 points 308.35 cents Tuesday. Prices closed near mid-range today and closed at a fresh 16-month low close. The key "outside markets" were bearish for copper Tuesday--lower crude oil and stock indexes and a firmer U.S. dollar index. Serious near-term chart damage has occurred recently. Copper bears have the solid overall near-term technical advantage as a two-month-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 300.00 cents. First resistance is seen at Tuesday's high of 315.50 cents and then at this week's high of 317.90 cents. First support is seen at today's low of 303.60 cents and then at 300.00 cents. Wyckoff's Market Rating: 1.0.

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By Jim Wyckoff contributing to Kitco News; jim@jimwyckoff.com

 

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