(Kitco News) - Comex December gold and silver futures prices ended sharply higher Tuesday as traders stepped up in strong fashion to "buy the dip" in prices and do some bargain hunting. A weaker U.S. dollar index and solid gains in crude oil prices also supported buying interest in the precious metals. Technical odds on Tuesday increased that near-term market lows are in place for gold and silver. December gold last traded up $54.00 an ounce at $1,649.00 an ounce. Spot gold last traded up $18.70 an ounce at $1,647.25. December Comex silver last traded up $1.68 at $31.66 an ounce.
The world stock markets moved higher Tuesday as risk appetite at least temporarily increased. There were news reports the European Union sovereign debt situation may be a bit closer to being shored up following ongoing talks among EU and IMF leaders. Ironically, safe-haven gold rallied Tuesday in the face of the improved investor risk appetite. What the better investor risk appetite Tuesday did for precious metals is to provide traders with the courage to step in and buy the dip and do some bargain hunting on ideas recent losses in the metals were way overdone. Also, much of the margin-call-related selling pressure in gold and silver has now likely already occurred, which eliminated a big, bearish factor in the metals.
The U.S. dollar index traded sharply lower Tuesday on profit taking after hitting a fresh 7.5-month high on Monday. That was supportive for gold and silver. However, the dollar index bulls still have the overall near-term technical advantage.
Crude oil futures prices traded sharply higher Tuesday on short covering and amid the improved tone of the EU debt situation. Crude prices hit a fresh six-week low of $77.11 a barrel on Monday. Tuesday's solid gains in crude oil were a bullish factor for the precious metals markets.
The London P.M. gold fixing was $1,659.00 versus the previous P.M. fixing of $1,598.00.
Technically, December gold futures prices closed near mid-range Tuesday. Prices Monday hit a fresh 2.5-month low of $1,535.00, but have made a very strong, quick rebound from that spike low to suggest the bears became exhausted at the lower price level and that a near-term market low is in now in place. However, serious near-term technical damage has been inflicted in gold recently and the bulls have heavy lifting to do to restart a near-term price utprend. Prices are still in a steep three-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 this week's low of $1,535.00. First resistance is seen at Tuesday's high of $1,679.20 and then at $1,705.40. First support is seen at last week's low of $1,631.70 and then at Tuesday's low of $1,616.80. Wyckoff's Market Rating: 5.0.
December silver futures prices closed near mid-range Tuesday. The key "outside markets" were also bullish for silver, as the U.S. dollar index was lower and crude oil prices were sharply higher. While serious near-term and longer-term chart damage has been inflicted recently, this week's price action suggests the bears became exhausted at Monday's lower price levels as selling interest dried up at Monday's low of $26.15 and prices rebounded strongly. Today's strong follow-through buying interest is a clue that a near-term market bottom is in place. However, at present prices are still in a six-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is producing a close above strong technical resistance at $35.00 an ounce. The next downside price breakout objective for the bears is closing prices below psychological support at $30.00. First resistance is seen at $32.00 and then at $32.50. Next support is seen at $31.50 and then at $31.00. Wyckoff's Market Rating: 4.0.
December N.Y. copper closed up 1,640 points 344.70 cents Tuesday. Prices closed nearer the session high on short covering after hitting a 14-month low on Monday. Serious near-term chart damage has occurred recently. However, Monday's high-range close and then strong buying interest today suggests the bears became exhausted at Monday's lower price levels and a near-term market bottom is now in place. Copper bears do still have the overall near-term technical advantage as a 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 375.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at this week's low of 307.15 cents. First resistance is seen at Tuesday's high of 348.35 cents and then at 350.00 cents. First support is seen at 340.00 cents and then at 335.00 cents. Wyckoff's Market Rating: 3.0.
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By Jim Wyckoff contributing to Kitco News; jim@jimwyckoff.com
