(Kitco News) - Comex December gold futures ended the U.S. day session sharply lower on heavy profit-taking pressure from recent gains and amid a stronger U.S. dollar index. Importantly, no significant chart damage occurred Monday. December gold last traded down $51.50 at $1,808.00 an ounce. Spot gold last traded down $53.70 an ounce at $1,805.50. December Comex silver last traded down $1.629 at $39.99 an ounce.
The European Union sovereign debt crisis was back in the headlines Monday. There was no major weekend breakthrough regarding dealing with what is now the EU debt-strapped nation in the spotlight: Greece. There is growing belief Greece is a sinking ship within the EU that cannot be righted. Italian bond yields are also rising, which is another indication of lack of confidence in the EU financial system. The Euro currency has plunged and the U.S. dollar index has rallied as investors flee European Union assets. While gold saw some selling pressure Monday, the EU debt crisis is still a major underlying bullish factor for safe-haven gold.
The U.S. dollar index traded solidly higher Monday and hit a fresh six-month high. The greenback bulls have gained good upside near-term technical momentum recently, to suggest a price uptrend can now be sustained. If the U.S. dollar index continues to trade sideways to higher, that would be a bearish underlying factor for the precious metals markets.
There were reports overnight that part of gold's weakness Monday was due to margin calls in other weak markets that forced traders to pull some money out of the gold market to meet those margin calls.
If recent history repeats itself, bargain hunters will once again step in to "buy the dip" on perceived bargain hunting in gold.
Here's an important element for all gold traders to monitor closely: If the U.S. stock indexes drop below their August price lows, that would be extremely bearish for U.S. stocks and very likely significantly bullish for safe-haven gold. The U.S. stock indexes are starting off the week on shaky ground as prices are hovering not that far above the August lows.
The London P.M. gold fixing was $1,834.00 versus the previous P.M. fixing of $1,851.00.
Technically, December gold futures prices closed nearer the session low Monday. No significant chart damage occurred, but the bulls do not want to see strong follow-through selling pressure on Tuesday. The gold market bulls still have the solid overall technical advantage. Bulls' next upside technical objective is to produce a close above solid technical resistance at the all-time high of $1,923.70. Bears' next near-term downside price objective is closing prices below solid technical support at last week's low of $1,793.80. First resistance is seen at $1,825.00 and then at 1,850.00. First support is seen at $1,800.00 and then at last week's low of $1,793.80. Wyckoff's Market Rating: 7.5.
December silver futures prices closed nearer the session low Monday and hit a fresh three-week low. Prices also dipped below $40.00 in afternoon trading. Silver prices were also pressured by a stronger U.S. dollar today. The silver bulls still have the overall near-term technical advantage, but did fade Monday and need to show fresh power soon. Prices are still in a choppy, nine-week-old uptrend on the daily bar chart. Bulls' next upside price objective is producing a close above strong technical resistance at the September high of $43.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $40.00. First resistance is seen at $40.50 and then at $41.00. Next support is seen at $40.00 and then at $39.50. Wyckoff's Market Rating: 6.0.
December N.Y. copper closed down 320 points 397.05 cents Monday. Prices closed nearer the session high and saw good follow-through selling pressure from strong losses seen last Friday. Copper bulls have faded badly recently. Bears now have the slight overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 415.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the August low of 384.20 cents. First resistance is seen at 400.00 cents and then at 402.50 cents. First support is seen at 395.00 cents and then at 392.50 cents. Wyckoff's Market Rating: 4.5.
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By Jim Wyckoff contributing to Kitco News; firstname.lastname@example.org