There is a flurry of economic reporting activity this week. The first out of the gate, ADP's labor report, seems to have initially depressed gold prices, then that dip inspired investors to step in on bargain-hunting and short covering.

 The monthly ADP U.S. national employment report for November came in at an unexpectedly healthy 215,000 jump in the number of workers. That beat market expectations of a rise of around 170,000. Gold experienced immediate selling pressure following the ADP report, although that pressure was half-hearted allowing bargain hunters to seize the day.

This afternoon, the Federal Reserve's beige book was issued; little new in the way of direction could be found in it. But there was no real down  news.

The monthly European Central Bank monetary policy meeting comes on Thursday and the U.S. official Labor Department jobs report will come out on Friday. News from those two events will be the biggest fundamentals engine for a while.

KITCO said today that, "Traders and investors for many weeks have been buzzing about the precise timing of when the Fed will alter its monetary policy and back off from its monthly bond-buying program-called quantitative easing. So far this week's batch of generally upbeat U.S. data has fallen into the camp that reckons the Fed will act to taper sooner rather than later. However, the more critical economic data out this week is yet to come. This week's data will provide at least some new insight on the timing of the Fed's next move."

Almost all the uptick in gold prices was due to "normal trading," the dollar holding even on the day. Silver is also up a healthy amount.

"It almost seems too easy to get short gold right now," said Adam Klopfenstein, a senior market strategist with Archer Financial Services LLC.

On Wednesday, however, the system-wide bets on lower gold prices backfired. An updraft on the back of a lackluster dollar swiftly escalated into a rally, which caused more traders to try to limit losses on bearish moves by buying back contracts or otherwise taking countervailing long positions. That helped today's rise.

"People are just being cautious," said Bob Haberkorn, a senior commodities broker with RJO Futures.

The eagle eyes trained on Friday's labor report hope to gain a clearer insight into the Fed's next move.

For gold, ending the Fed's stimulus removes a long-running source of support. (Of course it won't be "ending" anytime soon, but rather will shrink gradually.) Many investors feared the massive infusion of liquidity would lift inflation or weaken the dollar and so sought safety in gold. It didn't.

Mr. Haberkorn said that Wednesday's run up won't be marking the beginning of a new rally in gold.

"The market is looking for what comes out on Friday and will take direction from the jobs number," he said, referring to the U.S. Labor Department's release of the November employment report.

As always, wishing you good trading,

Gary S. Wagner- Executive Producer

Market Forecast:

In the Market Forecast yesterday we spoke about the fact that the underlying characteristics in gold have been a choppy and sideways market. We recognized that there was resistance at 1225. The key word obviously is "was." Today's price action was characterized as a dramatic and sharp spike to the upside as we saw gold trade to an intraday high just above 1250 per ounce. The real superlative resistance in the market has been, and still is, 1250 to 1255. Looking at short-term studies such as a 60-minute gold chart one can quickly identify a triple top which has occurred over the last few weeks in trading. There has been a defined ceiling as each time gold prices reached 1250, it was met by tremendous selling pressure which would then pull the market to lower prices.

 Interestingly enough gold was trading about $10 lower in overnight trading, and hit a new intraday low of 1211. As much as the market waits with bated breath for each report as it comes out, it is Friday's job report that traders have been intensely focusing upon. Today's video will detail my current observations as well as strategies. And I will present a strategy for those inclined to take on risk by adding to their current short position. This strategy is only for high, high risk traders, and our official take is to simply maintain our short position, without adding to it, nor changing the stop

Proper Action

Maintain Gold Short at 1276  stop @ 1261  ...  Maintain Short silver @ 20.47 stop @ 20.50

COT LINK  See previous weeks in Historical Commitments of Traders Reports.

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