Can't Start A Fire Without A Spark

Gold was down again somewhat severely today essentially on technical selling, lack of physical buying and no safe-haven demand.

We did not experience a completely news-free day, nor did we see any drama in either the economic news coming out of the U.S. nor from the crisis in Ukraine/Crimea.

In the fourth quarter, the American economy expanded faster than previously estimated and new claims for unemployment assistance dropped to nearly a four-month low last week. Gross domestic product expanded at a 2.6% annual rate, the Commerce Department said today, up from the 2.4% rate it reported last month. Those are news tidbits that have analysts holding their heads and wondering if the Fed will raise rates "soon."

What has economists particularly excited is that the revision all came on the wings of increased consumer spending, despite the hammering weather. Business spending was healthy and the decline in government expenditures was less precipitous.

"The recovery is finally self-sustaining. Although growth will be slightly weaker in the first quarter, the economy should quickly pick back up again in the second quarter," said Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh.  

Housing will take a while to pull out of its recent slump, however, as contracts for the purchase of previously owned homes fell to their lowest level in almost 2-1/2 years in February. Some of that maybe be blamed on the weather. Some on rising prices on older homes, which are being bid up through demand in and around big cities' suburbs to really astronomical heights.  

"The economy looks in a better place than it did just 24 hours ago. The outlook is assured, so look for the Fed to normalize its policy sooner rather than later," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

No one is sure exactly where China's gold imports in March will end up. In February the dollar total was in excess of $3.8 billion. That may be an aberrancy. Last month a whole additional group of banks were granted the right to import gold from Hong Kong. So, it could have been first-timers stocking up.

We keep hearing that India is going to ease restrictions on gold importation. The surge from that - if it ever happens - will certainly boost gold.

As always, wishing you good trading,