Gold ended the U.S. day session with modest gains in choppy and two-sided trade Thursday. Prices rebounded from a morning sell off following news the European Central Bank cut its economic growth forecast for the European Union. Some fresh safe-haven investment demand was seen in the yellow metal. Short covering and bargain hunting were also featured. Prices had been under moderate selling pressure earlier Thursday, on mostly technical selling and a firming U.S. dollar index. February gold last traded up $4.80 at $1,698.50 an ounce. Spot gold was last quoted up $2.90 at $1,697.75. March Comex silver last traded up $0.073 at $33.03 an ounce. At its monthly meeting Thursday, the European Central Bank said that Euro zone economic growth will be stagnant to declining during 2013. The ECB projected overall EU economic growth at minus 0.3% during 2013. Just three months ago the ECB projected overall EU economic growth at 0.5% during 2013. That news sunk the Euro currency, boosted the U.S. dollar index and prompted fresh safe-haven demand for gold, to push the metal’s price above unchanged on the day. Gold was trading near steady in very early trading and then sold off to hit the session low right after the release of the U.S. weekly jobless claims report that showed a decline in claims in the latest week. That report did prompt a slight uptick in the U.S. dollar index, which in turn put some fresh downside pressure on the precious metals. Gold bulls are still wobbly from a near-term technical perspective and need to show some more power soon to avoid more significant near-term chart damage being inflicted. In overnight news, European Union countries’ collective gross domestic product shrank by 0.1% in the third quarter, from the previous quarter, and was down 0.6% from the same period last year. EU businesses curtailed their investment and drew down their existing stockpiles in the three months ending in September. Most believe the EU will continue its economic contraction at least into the fourth quarter of 2012. Meantime, Greece’s unemployment rate rose to 26% in September, from 25.3% in August, it was reported Thursday. On the positive side, German manufacturing orders increased more than expected, at up 3.9% in October. The Bank of England and the European Central Bank left their interest rates unchanged after meetings Thursday, as expected. In the U.S., the focus of the market place remains on the “fiscal cliff” tax increases and spending cuts that is fast approaching. U.S. lawmakers are still jawboning on the matter. Wednesday, U.S. Treasury Secretary Geithner said the Obama administration is willing to go over the fiscal cliff if the wealthiest Americans are not taxed more. While the market place presently perceives odds are higher than not that there will be a last-minute agreement among U.S. lawmakers to avoid the fiscal cliff, the overall situation has been a bearish drag on many markets, including the raw commodities and stock markets. Friday’s U.S. jobs report for November may be a market mover, but that report will likely be skewed by the super storm that hit the U.S. east coast a few weeks ago and therefore be less market-sensitive. Forecasts call for the key non-farm payrolls figure to have risen by 80,000 in November. The market place is starting to look ahead to next week’s last Federal Reserve FOMC meeting of the year, on December 10 and 11. The “Operation Twist” program ends and the FOMC members must decide whether to extend the bond-buying program. Many believe the Fed will continue to purchase U.S. Treasuries and implement “QE4” at next week’s meeting. That would be raw-commodity market bullish, including bullish for the precious metals markets. Gold bulls have the slight overall near-term technical advantage but have faded recently and need to show more power soon. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,724.90. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at the November low of $1,674.70. First resistance is seen at Wednesday’s high of $1,708.30 and then at $1,720.00. First support is seen at this week’s low of $1,686.00 and then at $1,680.00. March silver futures prices closed nearer the session high Thursday. The silver bulls have faded a bit and need to show more power soon. Bulls do still have the slight overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the November high of $34.49 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $32.50. First resistance is seen at Thursday’s high of $33.33 and then at $33.50. Next support is seen at this week’s low of $32.585 and then at $32.50.
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