Gold, And Silver Prices Pop On Safe-Haven Demand

New York (Oc 2)  Gold and silver prices are solidly higher in early-afternoon U.S. trading Tuesday, on keener risk aversion in the marketplace coming from the European Union. Gold prices hit a one-week high, while silver notched a four-week high. Gold and silver bulls were especially encouraged by their metals’ ability to rally today in the face of a firmer U.S. dollar index that hit six-week high overnight. December gold futures were last up $15.60 an ounce at $1,207.30. December Comex silver was last up $0.208 at $14.71 an ounce.

Worldwide attention, especially in Europe, is on the new anti-establishment Italian government’s plans to deal with Italy’s financial and economic problems. The Euro currency slumped and gold prices rallied after a government official said Italy would be better off with its own currency. The European Union has to approve Italy’s budget plan that many are saying won’t pass muster with the EU. This matter appears to be escalating and could continue to pressure the Euro currency and provide more support to the safe-haven gold and silver markets.

World stock markets were mostly weaker overnight on the risk aversion that has crept back into the marketplace. However, the U.S. stock market rallied today as U.S. investors reckoned the Italy issue is not their problem—at least not yet. Chinese markets are closed until Friday for a public holiday.

The key other outside market today finds November Nymex crude oil prices slightly down after hitting a four-year high overnight. Nymex prices are trading just above $75.00 a barrel. The solid rally in the crude oil market is at the very least limiting some selling pressure in the precious metals markets, if not even prompting some outright buying interest.

Technically, gold prices pushed back up into the recent trading range today, which now suggests a market bottom has indeed been put in place, at the August low. The gold bears still have the overall near-term technical advantage. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,220.70. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the August low of $1,167.10.

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