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Gold Powers to Another All-Time High on Strong Safe-Haven Demand

Kitco News) - Comex gold futures prices closed the U.S. day session higher but near mid-range on some late profit taking in an impressive show of follow-through buying strength from solid gains posted Tuesday. Gold notched yet another new all-time record high of $1,675.90 an ounce, basis December futures. Strong safe-haven investor demand, including from central banks, continues to boost the precious metals markets. The world market place has moved back to a "risk off" mode, and that's fully bullish for gold. December gold last traded up $18.70 at $1,663.20 an ounce. Spot gold last traded up $0.70 an ounce at $1,661.25. December Comex silver last traded up $1.482 at $41.60 an ounce.

Investors and traders worldwide are now focusing on the prospects of a "double-dip" worldwide economic recession following a spate of weak economic data coming from the major world economies. Today's U.S. economic data came in about as expected. However, Friday's U.S. jobs report is more anxiously awaited, and most traders reckon that report will bolster notions the U.S. economy is sputtering.

The European Union sovereign debt crisis is back on the front burner now that the U.S. debt-limit issue has been addressed by the U.S. government. Italian and Spanish bond yields are this week at Euro-era record highs. The EU debt situation is much more serious than the U.S. debt woes and it could deteriorate into a worldwide debt contagion. That notion is one reason gold prices are soaring. Price action in the gold market this week reinforces the staunch bulls' assertion that gold is the ultimate world currency.

There has been recent talk in the gold market that many traders went short gold futures late last week, figuring that a U.S. debt deal would be reached before the August 2 deadline and gold prices would then back off significantly when the debt deal was reached. Those short traders have been squeezed badly and have been forced to cover their big losing bets this week, which has only driven gold futures prices still higher. Veteran traders know that when seeming "lay-up" or "no-brainer" trading ideas are put to work, trouble usually lies ahead for them.

The U.S. dollar index traded lower Wednesday, which was also bullish for the precious metals. The dollar index bears still have the overall near-term technical advantage. However, it's near present price levels in the dollar index that historical lows have been put in place.

Crude oil prices traded sharply lower again Wednesday morning and hit a fresh five-week low, amid the world economic slowdown worries. Gold traders are mostly ignoring crude oil at present, but crude will continue to be a major "outside market" force for the precious metals.

The London P.M. gold fixing was $1,669.25 versus the previous P.M. fixing of $1,637.75.

Technically, December gold futures prices closed near mid-range Wednesday. While the path of least resistance remains sideways to higher and buying the dips has proven beneficial for quite some time now, the market has again become short-term overdone on the upside and a corrective pullback soon would not be surprising nor unhealthy. There are no early clues to suggest a major market top is close at hand. Gold bulls still have the strong overall near-term technical advantage. Prices are in a six-month-old uptrend on the daily bar chart and in a 10-year-old uptrend on the monthly chart. Bulls' next near-term upside technical objective is to produce a close above major psychological resistance at $1,700.00. Bears' next near-term downside price objective is closing prices below solid technical support at $1,610.00. First resistance is seen at Wednesday's record high of $1,675.90 and then at $1,700.00. First support is seen at Thursday's low of $1,654.40 and then at $1,637.50. Wyckoff's Market Rating: 9.5.

December silver futures prices closed nearer the session high Wednesday and hit a fresh three-month high. The silver bulls have the solid overall technical advantage and gained some fresh upside momentum Wednesday. Prices are in a four-week-old uptrend on the daily bar chart. Bulls' next upside price objective is producing a close above solid technical resistance at $42.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at this week's low of $39.08. First resistance is seen at Wednesday's high of $42.07 and then at $42.50. Next support is seen at $41.00 and then at Wednesday's low of $40.625. Wyckoff's Market Rating: 7.0.

December N.Y. copper closed down 595 points 435.80 cents Wednesday. Prices closed near the session low and hit a fresh four-week low. The copper bulls still have the overall near-term technical advantage but have faded badly this week, to begin to suggest that a market top is in place. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at this week's high of 455.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 425.00 cents. First resistance is seen at 440.00 cents and then at Wednesday's high of 442.40 cents. First support is seen at Wednesday's low of 434.35 cents and then at 432.50 cents. Wyckoff's Market Rating: 6.0.