21 October 2010, 8:15 a.m.
By Jim Wyckoff
Of Kitco News
www.kitco.com

Comex gold prices are trading steady to slightly higher Thursday morning as the U.S. dollar is once again under selling pressure on the world foreign exchange markets. December Comex gold last traded steady at $1,344.20 an ounce. Spot gold was last quoted down $2.70 at $1,344.00.

The U.S. dollar index is trading lower Thursday and has given back all of Tuesday's big gains. Some upbeat manufacturing data coming out of Germany supported buying interest in the Euro currency Thursday, which helped to put downside pressure on the greenback. The dollar index bears have the solid overall near term technical advantage and have regained downside momentum following Tuesday's upside price hiccup. The weak technical and fundamental posture of the U.S. dollar index remains a bullish underlying factor for the precious metals.

U.S. economic data due for release Thursday includes the weekly jobless claims report, leading economic indicators report and the Philadelphia Fed business survey. Traders will also be paying close attention to a G-20 meeting taking place in South Korea Friday and Saturday. Traders will look for any proclamations regarding currencies. With most major countries wanting to keep their currencies deflated, that's also a bullish underlying factor for the gold market.

The London A.M. gold fixing was $1,345.25 versus the previous London P.M. fixing of $1,339.00.

Technically, gold futures bulls have the overall near-term and longer-term technical advantage. Wednesday was an extra important trading day, technically, in the gold market. Prices Wednesday rebounded from strong losses absorbed Tuesday, which suggests Tuesday's losses were just a healthy downside correction (also called a "reaction low") in an overall solid price uptrend on the daily chart. Gold prices are still in a 2.5-month-old uptrend on the daily bar chart and a nine-year-old uptrend on the monthly chart.

Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at last week's high of $1,388.10. Bears' next near-term downside price objective is closing prices below solid technical support at this week's low of $1,328.40. First resistance is seen at $1,350.00 and then at $1,360.00. Support is seen at the overnight low of $1,341.10 and then at Wednesday's low of $1,331.10. Today's key Fibonacci support/resistance level: $1,351.00.

December silver futures last traded up 4.1 cents at $23.905 an ounce Thursday morning. No chart damage has occurred in silver this week. Silver bulls still have the overall near-term technical advantage. Prices are still in a two-month-old uptrend on the daily bar chart. The next downside price objective for the bears is closing prices below solid technical support at this week's low of $23.27. Bulls' next upside price objective is producing a close above solid technical resistance at $25.00 an ounce. First resistance is seen at the overnight high of $24.07 and then at $24.25. Next support is seen at the overnight low of $23.655 and then at $23.50. Today's key Fibonacci support/resistance level: $23.92.

By Jim Wyckoff