(Kitco News) – Comex December gold futures prices are trading sharply higher early Monday, on bargain-hunting and safe-haven buying interest following recent strong selling pressure and amid the festering European Union sovereign debt crisis. December gold last traded up $35.60 an ounce at $1,657.90 an ounce. Spot gold last traded up $30.80 an ounce at $1,656.25. December Comex silver last traded up $1.007 at $31.09 an ounce.

U.S. and European stock markets are weaker Monday morning, amid the EU debt crisis and some more weak economic data coming out of Europe and Asia. The European Union sovereign debt situation during the weekend took a turn for the worse as reports said Greece will not meet its deficit targets this year. This has raised the stakes regarding a Greek debt default. This week the gold market is so far benefiting from the aforementioned situation, despite a stronger U.S. dollar early Monday. The EU debt crisis bolsters notions gold continues to be a “world currency” for many investors worldwide.

The recent selling pressure in gold has also prompted bargain hunters to step in and buy gold that is now over $200 an ounce cheaper than it was a month ago.

Reports recenly of good physical demand for gold from Asia are also supporting gold. The wedding and celebration season in India is seeing some increased demand for physical gold at present.

The U.S. dollar index is trading higher Monday morning and hit a fresh 7.5-month high overnight. The dollar index bulls have the solid overall near-term technical advantage, which had been a major underlying bearish factor for the precious metals recently. However, recent history has shown that the greenback and gold can both appreciate during times of keener investor anxiety in the market place.

Crude oil futures prices are trading lower Monday and crude bulls are fading again. Crude oil remains a leader in the raw commodity sector. Any bigger moves in the price of crude oil would likely impact most commodity markets, including the precious metals. If crude oil starts to trend lower and falls below its recent lows, that would be a bearish clue for most commodity markets, including gold and silver.

U.S. economic data due for release Monday includes construction spending, the ISM manufacturing report and domestic auto sales.

The London A.M. gold fixing was $1,660.00 versus the previous P.M. fixing of $1,620.00.

Technically, December gold futures have seen serious near-term technical damage inflicted recently. However, prices have also rebounded well up from the September spike low of $1,535.00. Price action in gold this week will be extra important as the bulls and bears struggle for near-term technical control of the market. Bulls’ next upside technical objective is to produce a close above solid technical resistance at $1,705.40. Bears’ next near-term downside price objective is closing prices below strong technical support at the September low of $1,535.00. First resistance is seen at the overnight high of $1,666.00 and then at $1,679.20. First support is seen at $1,650.00 and then at the overnight low of $1,620.00.

December silver futures have also seen serious near-term and longer-term chart damage inflicted recently. Prices have also rebounded well off the spike low of $26.15, scored in late September. Silver bulls have some heavy lifting to do in the near term to suggest an uptrend can be re-established. Silver bulls’ next upside price objective is producing a close above strong technical resistance at last week’s high of $33.585 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $26.15. First resistance is seen at $31.50 and then at $32.00. Next support is seen at $31.00 and then at $30.50.

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By Jim Wyckoff contributing to Kitco News; [email protected]

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Source: http://www.forbes.com/sites/kitconews/2011/10/03/comex-gold-posting-solid-gains-on-bargain-hunting-safe-haven-demand/