By Jim Wyckoff of Kitco News www.kitco.com Comex gold futures are trading modestly weaker Wednesday, on a corrective, profit-taking pullback from recent solid price gains, and amid a lack of major fresh fundamental news to move the market. August Comex gold last traded down $4.40 an ounce at $1,222.50. In overnight news, reports said Iran plans to convert 45 billion Euros from its foreign exchange reserve into gold and U.S. dollars. The report said the conversion will be carried out in three stages, and that the first stage has already begun. This news is being met with mixed ideas by the gold market, as most traders are awaiting further details of the plan. The Euro currency was slightly pressured on the news. While Iran is a small holder of foreign exchange reserves compared to other countries, its shift in reserves does raise the specter of similar moves by countries that hold much larger foreign exchange reserves. U.S. stock indexes and the U.S. dollar index are slightly higher in early dealings Wednesday, and are not providing much impetus for any larger price moves in the precious metals. Crude oil futures prices are slightly lower after Tuesday's sell off, and that is adding some downside pressure to the gold market early Wednesday. Look for gold prices to continue to be underpinned by safe-haven buying amid the European Union's debt crisis that has yet to fully play out. Traders continue to keep a close eye out for any further downgrades to European Union countries' sovereign credit ratings. The London A.M. gold fix was $1,221.00 versus the previous P.M. fixing of $1,227.75. (NOTE: I want part of my mission here at Kitco to be to help better educate you about how and why markets trade the way they do. One major factor in why markets trade the way they do is trader (human) psychology. Think about it: the price of any market is derived, on a daily basis, from a group of people who think the price should be what it is at present. If a trader knew more about human psychology, then he or she would likely be better able to determine why a group of people has determined the price of a market to be what it is--and, more importantly, also be able to make better assumptions on where prices are heading. I wrote a feature story on market and trading psychology a while back. I'd be happy to email it to you if you'd like to learn more on the matter. Just send me an email at jim@jimwyckoff.com and I'll attach it and email it back to you.--Jim) Technically, Comex gold futures bulls still have the solid overall near-term technical advantage. Prices are trading well above what was psychological resistance at $1,200.00 an ounce, and which is now psychological support. August gold futures prices are in a four-month-old uptrend on the daily bar chart. A close in August gold below the last "reaction low" low on the daily bar chart, at $1,168.00, would negate the aforementioned uptrend on the daily chart, produce serious near-term chart damage and would also be one early technical clue that a near-term market top is in place. For August gold, shorter-term technical resistance is seen at Tuesday's high of $1,230.60 and then at $1,240.00. Buy stops likely reside just above those levels. Sell stops likely reside just below chart support at Tuesday's low of $1,211.60 and then at $1,200.00. Today's key near-term Fibonacci pivot level for August gold: $1,220.00. Comex silver futures are trading slightly lower Wednesday. July silver last traded down 16.1 cent at $18.39 an ounce. Silver bulls still have the overall near-term technical advantage. Prices are in a four-month-old uptrend on the daily bar chart. Serious near-term chart damage in July silver would be inflicted if prices closed below the last "reaction low" on the daily bar chart, which is located at $17.41. July silver finds shorter-term technical resistance at the overnight high of $18.51 and then at Tuesday's high of $18.735. Buy stops likely reside just above those levels. Shorter-term technical support for July silver is located at Tuesday's low of $18.265 and then at $18.00. Sell stops are likely placed just below those levels. Today's key Fibonacci pivot level for July silver futures is located at $18.34.

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