(Kitco News) - Comex December gold futures prices are trading moderately lower in early U.S. trading Friday morning. It's another "risk-off" trader mentality in the market place Friday, which has the general raw commodity sector, including precious metals, trading lower. The U.S. dollar index is trading higher and hit another fresh seven-week high overnight, and that's also a bearish weight on gold and silver. December gold last traded down $13.90 at $1,682.00 an ounce. Spot gold last traded down $13.90 an ounce at $1,681.50. December Comex silver last traded down $0.669 at $31.215 an ounce.
The market place is digesting more negative news coming out of the European Union Friday morning. Italian bond yields have soared above 7% to Euro era record highs, while Eastern European currencies are under strong selling pressure after a credit rating agency downgraded Hungary's credit rating. With the EU debt crisis, it's like Rosanne Rosanna Danna used to say on the TV show Saturday Night Live: "If it's not one thing, it's another." There is increasing speculation in the market place that the European Union and the Euro currency cannot survive in the present form. This situation is prompting a "when in doubt, get out" mentality among most markets-including the precious metals and with the exception of the U.S. dollar index. The move into cash by many traders, heading into the weekend, is featured as long liquidation in many markets.
Gold market bulls have been frustrated recently that the yellow metal, which is itself considered a safe-haven asset, has not seen stronger investor demand amid the latest escalation in the EU debt crisis. But as of late the gold and silver markets have opted to trade on a daily basis more like their raw commodity counterparts and be more of a risk asset. Still, it's my bias that if the EU debt crisis continues to escalate, gold prices will at some point see a solid rally, on bargain hunting and safe-haven demand.
The U.S. dollar index is higher and hit a fresh seven-week high Friday, on safe-haven investor demand. The dollar index bulls have upside near-term technical momentum and that is a bearish underlying factor for the precious metals markets. Crude oil prices are trading lower Friday morning and have backed well down from last week's high as the crude bulls have faded to suggest a top is in place for that market.
There is no major U.S. economic data due for release Friday.
The London A.M. gold fixing was $1,676.00 versus the previous P.M. fixing of $1,692.50.
Technically, December gold futures have seen near-term technical damage inflicted recently. Prices have been trending lower for three weeks. Bulls' next upside technical breakout objective is to produce a close above solid technical resistance at $1,754.00. Bears' next near-term downside price objective is closing prices below solid technical support at $1,604.70. First resistance is seen at $1,700.00 and then at this week's high of 1,727.40. First support is seen at the overnight low of $1,672.60 and then at this week's low of $1,667.10.
December silver futures prices have also seen near-term technical damage inflicted recently. The bears have the slight near-term technical advantage. Bulls' next upside price breakout objective is closing prices above solid technical resistance at $34.00 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 the overnight high of $31.855 and then at $32.00. Next support is seen at $31.00 and then at this week's low of $30.65.
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By Jim Wyckoff, contributing to Kitco News; email@example.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.