P.M. Kitco Metals Roundup: Comex Gold Rallies to New High on Bargain Hunting, Fresh Safe-Haven Buying

28 September 2010, 1:49 p.m.
By Jim Wyckoff
Of Kitco News
www.kitco.com

Comex gold on Tuesday closed higher, near the daily high and set a new all-time record high of $1,311.80 an ounce, basis the December futures contract. After an early profit-taking setback in gold, bargain-hunters stepped in to "buy the dip" as the U.S. dollar index weakened further following some more dour U.S. economic data. December Comex gold last traded up $10.10 an ounce at $1,308.70. Spot gold was last quoted up $12.90 at $1,308.00.

The U.S. dollar index hit a fresh eight-month low Tuesday morning, after having stabilized for just a bit, when the U.S. consumer confidence index was released and showed a significantly weaker-than-expected reading. That news also sent U.S. Treasury prices higher and temporarily dented the U.S. stock market. Safe-haven buying interest in gold also quickly surfaced following the consumer confidence report's release. Some fresh worries about the European Union's sovereign debt crisis have also crept back into the market, which is also supportive for gold prices.

The weak consumer confidence report Tuesday also lent more credence to notions the U.S. Federal Reserve will soon implement a fresh round of quantitative easing of monetary policy to stimulate an anemic U.S. economy. That would be U.S. dollar-bearish and gold-bullish.

The U.S. dollar index also remains very weak, technically. As long as the dollar index remains in an overall price downtrend on the charts, look for gold prices to continue to trend sideways to higher, with intermittent bouts of profit-taking pressure, like the market saw Tuesday.

The London P.M. gold fixing was $1,294.00 versus the previous P.M. fixing of $1,297.00 an ounce.

From an important technical perspective, December gold futures scored a big and bullish "outside day" up on the daily bar chart--whereby the high is higher and low is lower than the previous day's trading range, with a higher close. Gold bulls have the solid overall near-term technical advantage and gained more power Tuesday. There are still no early technical clues to suggest a market top is close at hand in the gold market. Prices are in a two-month-old uptrend on the daily bar chart. Bulls' next near-term upside technical objective is to produce a close above psychological resistance at $1,325.00. Bears' next near-term downside price objective is closing prices below solid technical support at Tuesday's low of $1,276.20. First resistance is seen at Tuesday's all-time high of $1,311.80 and then at $1,315.00. Support is seen at $1,300.00 and then at $1,290.00. Wyckoff's Market Rating: 9.0.

December silver futures closed up 25.9 cents at $21.73 an ounce Tuesday. Prices closed near the session high, hit a fresh 30-year high and also scored a big and bullish "outside day" up on the daily bar chart. The weaker greenback today and the rally in gold boosted silver prices solidly higher. Silver bulls still have the solid near-term technical advantage. Prices are in a steep five-week-old uptrend on the daily bar chart. 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 $21.00. Bulls' next upside price objective is producing a close above solid technical resistance at $22.50 an ounce. First resistance is seen at Tuesday's high of $21.775 and then at $22.00. Next support is seen at $21.50 and then at $21.25. Wyckoff's Market Rating: 9.5.

December N.Y. copper closed up 345 points at 363.15 cents Tuesday. Prices closed near the session high and closed at a fresh 5.5-month high close. A weaker U.S. dollar boosted the copper market Tuesday. The copper bulls have the solid overall near-term technical advantage. Prices are in a four-month-old uptrend on the daily bar chart. Bulls' next upside objective is pushing and closing prices above solid technical resistance at the April high of 366.90 cents. The next downside price objective for the bears is closing prices below solid technical support at 345.00 cents. First resistance is seen at this week's high of 364.40 cents and then at 367.50 cents. First support is seen at 360.00 cents and then at Tuesday's low of 356.90 cents. Wyckoff's Market Rating: 8.0.

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

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