Gold prices ended the U.S. day session moderately higher Thursday, posting a corrective technical bounce from Wednesday’s strong selling pressure. Bargain hunting and short covering were featured Thursday. The key outside markets were also bullish for the precious metals Thursday, as the U.S. dollar index was weaker and crude oil prices were higher. February gold last traded up $11.20 at $1,730.00 an ounce. Spot gold was last quoted up $8.40 at $1,728.75. March Comex silver last traded up $0.64 at $34.41 an ounce. The gold arena is still buzzing about the swift and steep downdraft in gold futures prices Wednesday morning. Just after the Comex gold futures market opened at 8:20 a.m. EST Wednesday heavy sell orders flooded in and prices very quickly dropped by over $20 an ounce. Some reports said there were heavy put options purchases seen in the gold futures market Tuesday. There was no major news event which occurred during or near that timeframe Wednesday morning to explain the sudden downdraft in gold prices. There were rumors in the market Thursday that a large “fund” trader unleashed a major sell order at the futures open Wednesday. If that large fund trader was the one that purchased the put options on gold futures the day before, or was involved with the firm that did, then it lends credibility to those market watchers who reckon gold can be and has been manipulated. At the very least it appears a group of traders tried to “game” the gold market on a very short-term basis. Still, from an overall and a longer-term market perspective, that no single trading entity has the power to control a market’s price for very long—especially a market so robust as gold. It was a bit better risk mentality day in the market place Thursday, and that benefitted the raw commodity markets, including gold and silver. The rhetoric continued among U.S. lawmakers and President Obama regarding the so-called “fiscal cliff” tax increases and spending cuts that are approaching. House Speaker John Boehner and Senate leader Harry Reid traded barbs Thursday. However, this time the market place reacted little to their rhetoric. This suggests the market place is coming to the conclusion that some type of agreement will be reached on the fiscal cliff matter before the end of the year. There was some more upbeat economic data coming out of the U.S. and European Union Thursday. The U.S. third-quarter gross domestic product came in at up 2.7%, which was the strongest growth rate in three years. Meantime, lower unemployment in Germany and upbeat business confidence in the EU were reported Thursday. Spanish and Italian bond yields declined to their lowest levels in months. Declining Spanish and Italian bond yields suggest a stabilizing European Union debt situation, even though serious financial problems in the bloc remain. The London P.M. gold fixing was $1,725.00 versus the previous P.M. fixing of $1,708.00. Technically, February gold futures prices closed nearer the session high Thursday. Gold bulls still have the overall near-term technical advantage. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at the November high of $1,757.10. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at $1,700.00. First resistance is seen at $1,740.00 and then at $1,750.00. First support is seen at Thursday’s low of $1,720.10 and then at this week’s low of $1,707.90. March silver futures prices closed nearer the session high Thursday, hit a fresh seven-week high and saw bargain hunting and short covering. A four-week-old uptrend is in place on the daily bar chart and silver bulls have the solid overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $35.51 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at this week’s low of $32.995. First resistance is seen at Thursday’s high of $34.49 and then at $35.00. Next support is seen at $34.00 and then at Thursday’s low of $33.61.
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