Through Pressure from Big Losses Tuesday?

(Kitco News) – Comex December gold futures prices are trading lower Wednesday morning on more profit-taking pressure after the market absorbed heavy losses on Tuesday. The market place early Wednesday is leaning toward the “risk off” investor mentality

, which is helping to limit the downside in gold. Importantly, no significant technical damage has been inflicted in gold and the sizeable downside price correction was not unexpected. December gold last traded down $15.80 at $1,845.50 an ounce. Spot gold last traded up $13.20 an ounce at $1,843.00. December Comex silver last traded down $0.345 at $41.985 an ounce.

Gold traders decided to book some profits after prices Tuesday pushed to a fresh all-time record high of $1,917.90 an ounce. During the month of August, gold prices had appreciated by around $300.00, so a corrective pullback was due. Gold prices could continue to correct lower the rest of this week. However, if recent history continues to play out, investors and traders will “buy the dip” in prices, reckoning they are getting a bargain buy.

This week’s Federal Reserve symposium in Jackson Hole, Wyoming is attracting trader and investor attention. It was at last year’s event in Jackson Hole that Fed Chairman Ben Bernanke unveiled a fresh U.S. economic stimulus package. Given the recent spate of weak U.S. economic data, some reckon the Fed will announce another monetary stimulus effort at this year’s meeting (QE3). Bernanke is scheduled to give a speech in Jackson Hole on Friday. However, there is no clear consensus regarding whether Bernanke will spell out a fresh stimulus plan on Friday. Still, most commodity markets are being supported and the U.S. dollar index pressured this week by trader notions there will be some fresh U.S. monetary policy stimulus coming at some point, and sooner rather than later.

Anticipation regarding the Bernanke Jackson Hole speech Friday has temporarily pushed to the back burner the European Union debt crisis. But the ongoing EU debt crisis remains gold market bullish. Greek bond yields have hit record highs this week. There is a growing notion among economists and analysts that the European Union cannot, in its current form, survive the debt crisis. The EU debt crisis will remain an underlying bullish factor for gold.

The U.S. dollar index is trading weaker Wednesday morning and is trading near its recent lows. The greenback bears have the strong overall near-term technical advantage. That’s also bullish for the precious metals.

Crude oil prices are trading near steady Wednesday morning. The crude oil bulls this week have regained a bit of upside technical momentum. The crude oil market will continue to be a major “outside market” force for the precious metals.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, durable goods orders, the housing price index and the weekly DOE energy stocks report.

The London A.M. gold fixing was $1,850.00 versus the previous P.M. fixing of $1,876.00.

source: forbes.com

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