A.M. Kitco Metals Roundup: Comex Gold Steady-Weak on Corrective Pullback, Consolidation from Record High Tuesday

15 September 2010, 8:15 a.m.
By Jim Wyckoff
Of Kitco News

Comex gold futures prices are trading steady to slightly lower Wednesday morning, on a mild corrective, consolidative and profit-taking pullback after a record-setting day on Tuesday. December Comex gold last traded down $0.90 an ounce at $1,270.80. Spot gold was last quoted up $0.10 at $1,269.50.

The U.S. dollar index has rebounded from a solid down day on Tuesday, which is also somewhat limiting buying interest in gold Wednesday morning. U.S. stock indexes are weaker early Wednesday, while U.S. Treasuries are also slightly lower.

The business newswires Wednesday morning are highlighting gold's record highs on Tuesday, with prognosticators now predicting the next upside targets before year's end. Most thought $1,300 an ounce would be achievable soon, with $1,350 also very possible by year end. One thing is likely to occur in the near term: bigger daily price moves now that gold prices are in uncharted territory.

U.S. economic reports due out Wednesday include the MBA weekly mortgage applications survey, the Empire State Manufacturing Survey and import and export price indexes.

The London A.M. gold fixing was $1,270.40 versus the previous London P.M. fixing of $1,265.50.

From an important technical perspective, December Comex gold futures bulls still have the strong overall near-term and longer-term technical advantage. Prices are in a seven-week-old uptrend on the daily bar chart.

Bulls' next near-term upside technical objective is to produce a close above psychological resistance at $1,300.00. Bears' next near-term downside price objective is closing prices below solid technical support at last week's low of $1,237.90. First resistance is seen at Tuesday's record high of $1,276.50 in December gold, and then at $1,280.00. Support is seen at $1,264.70 and then at $1,260.00.

An examination of the longer-term weekly and monthly continuation charts for nearby Comex gold futures prices also reveals longer-term uptrends are firmly in place on those charts. On the monthly gold chart, prices have been trending higher for nearly 10 years, since the early-2001 low of $255.00 an ounce. For the longer-term price uptrend on the monthly gold chart to be negated, based upon the last "reaction low" on the chart being penetrated on the downside, nearby gold futures prices would have to drop below that last
reaction low, which is presently $1,044.50. On the weekly gold chart, the last reaction low is $1,155.60. Any time a major price uptrend is negated on the longer-term charts, it's a strong clue that a major market top is in place.

Comex silver futures are slightly higher Wednesday. December silver last traded up 2.8 cents at $20.46 an ounce. Prices overnight scored another fresh 26-month high. Silver bulls still have the solid near-term technical advantage. There are still no early technical clues to suggest a market top is close at hand. The next downside price objective for the bears is closing prices below solid technical support at $19.68. Bulls' next upside price objective is producing a close above solid technical resistance at $21.00 an ounce. First resistance is seen at the overnight high of $20.56 and then at $20.75. Next support is seen at the overnight low of $20.40 and then at $20.27.

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


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