December gold futures are once again on the move north, eclipsing the $1550.0 handle. Bidders have dominated today’s action throughout the session, producing a $15 per ounce gain. At this point, it appears as though bullion is poised to make fresh yearly highs in the short-term.

Since this morning’s bullish open, U.S. stocks have posted yet another reversal. The big three indices are trending to the red, led by a 150 point drop in the DJIA. Losses in the DOW have been driven by substantial downturns in UnitedHealth and JP Morgan Chase shares. For the time being, the early-session risk-on sentiment has been replaced by an exodus to bullion and other safe-havens.

In addition to the rally in December gold futures, bond buyers were active in today’s U.S. 2-Year Note Auction. Yields plunged from 1.825% to 1.516%, a major signal that institutional capital is flowing into bonds and demand is high. Ultimately, investors are putting the brakes on risk exposure as August draws to a close.

December Gold Futures Approach Yearly Highs

For all intents and purposes, December gold futures are in a bull market. The summer season has been a good one for GOLD, with values up more than $200 per ounce.

Here are the levels to watch for the near future:

• Resistance(1): Spike High, $1565.0
• Support(1): 38% of August’s Range, $1506.6

Bottom Line: A longside bias is warranted for December gold, as price is trending north above 38% of August’s range ($1506.6). Accordingly, any chance to buy in on a retracement of the bullish action is a solid play.

As long as the Spike High ($1565.0) remains the top of this market, I will have buy orders ready to go from $1507.9. With an initial stop at $1504.4, this trade produces 35 pips on a static 1:1 risk vs reward ratio. At this point, a retracement to $1507.0 appears to be a bit of a longshot. However, with a bit of luck, December gold will pull back ahead of the monthly close on Friday.