Gold Stronger on Light Short Covering, Bargain Hunting

Gold prices on the Comex are registering modest gains in early Monday morning trading with short covering and bargain hunting following Friday’s strong sell-off. The gold price dipped to a new six-week low in overnight trading as key outside markets indicated a bullish posture for precious metals in Monday trading with a weakened U.S. dollar and strong crude oil prices.

On a technical basis, gold and silver need to show some drive to the upside in order to retain the bull market momentum, according to analysis with Forbes.

U.S. gold for December delivery gained $2.20 per troy ounce to trade at $1,726.20 per troy ounce as the spot price of gold rallied $4.50 to $1,725.50 per troy ounce. Comex silver for December delivery gained $0.098 to $32.195 per troy ounce.

Overnight, European stock markets strengthened along with the euro currency as Spanish elections indicated the ruling conservative party is maintaining power, taken by some as an indication the country’s policy regarding its sovereign debt is working. This has increased anticipation that Spain will be formally requesting a bailout from the EU in the near future.

With quiet trading in the Asian session and gently heightened tensions in the Middle East, the focus of investors this week is anticipated to be on the U.S. Presidential debate set for Monday night as well as the latest meeting of the Federal Reserve’s Federal Open Markets Committee happening Thursday.

The London A.M gold fix is $1,725.00 against the previous P.M fix at $1,737.00 per troy ounce.

On a technical basis, gold futures bears have taken new downside near-term technical momentum according to analysis at Forbes as prices overnight hit a new six-week low and Friday’s close was in decidedly bearish territory. Prices on the daily bar cart register a lowering trend for the past three weeks as bulls need to show new momentum in near-term in order to avoid chart damage.

Last week’s high at $1,755.50 per troy ounce is the technical resistance on the upside for bulls to breach and support is seen at the overnight low of $1,714.40 per troy ounce, then at the psychologically important $1,700.00 level.

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