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A.M. Kitco Metals Roundup: Gold Weaker on More Profit Taking, but Bull Flag May be Forming on Chart

Comex gold futures prices are once again modestly lower in early U.S. trading Thursday, on some more profit-taking and chart consolidation. However, the gold and silver markets are still in near-term bullish technical postures, and bull flags/pennants may be forming on the daily bar charts for both markets. The overall market place remains quieter as traders and investors await a speech by U.S. Federal Reserve Chairman Ben Bernanke on Friday. December gold last traded down $3.20 at $1,659.70 an ounce. Spot gold was last quoted up $0.90 an ounce at $1,657.50. December Comex silver last traded down $0.117 at $30.81 an ounce.

The world market place remains subdued ahead of the U.S. Federal Reserve's annual meeting at Jackson Hole, Wyoming, which begins Thursday. Fed Chairman Bernanke is speaking on Friday. Next week's monthly European Central Bank meeting (September 6) will also be an important central bank event. Anticipation is high that both the U.S. and EU central banks will announce fresh monetary stimulus initiatives at these meetings. Many markets are subdued ahead of these key events. Presently, many veteran market watchers, including this one, reckon odds are 50-50, or just a bit higher, that the Fed will announce a fresh monetary stimulus package at Jackson Hole, or at the FOMC meeting in September. Odds are higher, yet, that the ECB will announce a fresh stimulus package at next week's meeting.

In overnight news, China Premiere Wen Jiabo said his country will continue to buy European debt, which gave some support to the Euro currency. An Italian bond auction fetched lower yields than last month, which hints there is some growing optimism the EU debt crisis is at least stabilizing. There was fresh, dour economic data coming out of leading EU country Germany overnight, as unemployment claims rose and business confidence declined to a 1.5-year low.

The U.S. dollar index is slightly lower in early trading Thursday. The greenback bears still have the slight near-term technical advantage as a five-week-old downtrend line is in place on the daily bar chart. Meantime, crude oil prices are near steady Thursday. Oil bulls still have the near-term technical advantage. The precious metals markets will continue to look closely at how these two key "outside markets" trade on a daily basis.

U.S. economic data due for release Thursday includes the weekly jobless claims report, personal income and outlays, the Kansas City Fed manufacturing survey, and ICSC chain store sales trends.

The London A.M. gold fixing is $1,657.00 versus the previous A.M. fixing of $1,664.25.

Technically, December gold futures bulls still have the near-term technical momentum advantage. A bull flag or bullish pennant pattern may be forming on the daily bar chart. The gold bulls' next upside price breakout objective is to produce a close above psychological resistance at $1,700.00. Bears' next near-term downside price objective is closing prices below solid technical support at $1,633.30. First resistance is seen at the overnight high of $1,662.90 and then at Wednesday's high of $1,672.50. First support is seen at this week's low of $1,654.40 and then at $1,650.00.

December silver futures are also seeing some mild profit taking. Silver bulls still have the overall near-term technical advantage. A bull flag or bullish pennant pattern may be forming on the daily bar chart. Bulls' next upside price breakout objective is closing prices above solid technical resistance at $31.50 an ounce. The next downside price breakout objective for the bears is closing prices below major psychological support at $30.00. First resistance is seen at $31.00 and then at this week's high of $31.315. Next support is seen at this week's low of $30.575 and then at $30.285.

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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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