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(Kitco News) - Comex February gold futures prices ended the U.S. day session with solid gains Tuesday. Bargain hunting buying interest and short covering were featured following recent selling pressure. A weaker U.S. dollar index and sharply higher crude oil prices were also bullish “outside market” forces working in favor of the precious metals Tuesday. February gold last traded up $19.50 at $1,616.20 an ounce. Spot gold last traded up $20.30 an ounce at $1,614.75. March Comex silver last traded up $0.666 at $29.54 an ounce.

The precious metals saw bargain-hunting buying interest following recent strong selling pressure. It was also a “risk on” trading day in the market place Tuesday. Given that gold has acted more like a risk asset in recent weeks, that was also bullish the yellow metal.

Barring any major flare-up in the European Union debt crisis or some other geopolitical surprise development, look for the precious metals and most other markets to quiet down and see low-volume trading until after the holidays. The major fund players have likely closed up their books for the year. There is also market talk this week that physical demand for gold will pick up significantly after prices have backed off recently.

There were no major, fresh developments on the European Union debt crisis scene Tuesday. Some better German economic data and a well subscribed Spanish bond auction Tuesday did support the Euro currency, which in turn put some downside price pressure on the U.S. dollar index.

The U.S. dollar index traded lower Tuesday on profit-taking pressure. The dollar index bulls still have the solid overall near-term technical advantage, which is still a bearish underlying factor for the precious metals markets. Crude oil prices traded sharply higher Tuesday, which was also a positive for the precious metals.

The London P.M. gold fixing was $1,613.50 versus the previous P.M. fixing of $1,598.00.

Technically, February gold futures prices closed nearer the session high Tuesday. Still, near-term chart damage has been inflicted recently. Prices are still in a five-week-old downtrend on the daily bar chart. A bear flag or bearish pennant pattern could be forming on the daily bar chart. Bulls' next upside technical breakout objective is to produce a close above solid technical resistance at $1,650.00. Bears' next near-term downside price objective is closing prices below major technical support at the September low of $1,543.30. First resistance is seen at Tuesday’s high of $1,620.80 and then at $1,630.00. First support is seen at $1,600.00 and then at this week’s low of $1,585.50. Wyckoff's Market Rating: 4.0.

March silver futures prices closed near the session high Tuesday on short covering and bargain hunting. Near-term technical damage has been inflicted recently. Silver prices are still in a six-week-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $31.00 an ounce. The next downside price breakout objective for the bears is closing prices below major technical support at the September low of $26.185. First resistance is seen at $30.00 and then at $30.50. Next support is seen at $29.00 and then at Tuesday’s low of $28.695. Wyckoff's Market Rating: 3.5.

March N.Y. copper closed up 615 points 337.00 cents Tuesday. Prices closed nearer the session high. The key “outside markets” were bullish for copper Tuesday, as the U.S. dollar index was lower and crude oil and U.S. stock index prices were sharply higher. Copper bears still have the overall near-term technical advantage. 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 major psychological support at 300.00 cents. First resistance is seen at Tuesday’s high of 339.00 cents and then at 340.00 cents. First support is seen at 335.00 cents and then at 330.00 cents. Wyckoff's Market Rating: 4.0.

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

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