Comex gold prices are trading modestly lower Tuesday morning. Mild profit-taking pressure is seen, as the U.S. dollar index has rebounded a bit. However, gold remains in a solidly bullish near-term and longer-term technical posture. December Comex gold last traded down $5.40 an ounce at $1,349.00. Spot gold was last quoted down $6.30 at $1,348.00.

The U.S. dollar index is trading slightly higher Tuesday on some short covering in a bear market. The index Monday hit a fresh nine-month low. The U.S. dollar index remains very weak, technically. Look for gold and the dollar index to continue to trade in an inverse price relationship. The fact the dollar index remains technically weak is a bullish underlying factor for the gold market that will continue to invite bargain-hunting buying interest on dips in the precious yellow metal.

However, as I suggested last week, the markets have already factored in the likely upcoming quantitative easing of U.S. monetary policy--likely to occur in November. This means the U.S. dollar and other markets are likely to see a limited reaction once the "QE" is officially announced. The U.S. dollar could even rally on the QE news, on a "sell the rumor, buy the fact" scenario that is well known among veteran market watchers.

News reports overnight said Goldman Sachs has raised its 12-month gold price target to $1,650.00 an ounce.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs chain store sales index, the weekly Johnson Redbook retail report and the employment trends index and the FOMC meeting minutes.

The London A.M. gold fixing was $1,343.50 versus the previous London P.M. fixing of $1,351.50.

By Jim Wyckoff of Kitco News; jwyckoff@kitco.com