Home On The Rangebound

Gold bulls are sniffing, looking, digging, listening with ear to the ground - everything short of consulting the tea leaves - to find some shred of news that will drive prices up.

Alas, today was not much different than yesterday.

Ukraine was quiet. Elections that should prove to bring in a government that will steer a middle course between Russia and the West are due on Sunday. Unless something monumentally bizarre occurs, the elections will probably calm things down considerably.

Russia is trying hard, meanwhile, to close an enormous natural gas deal with China, but price seems to be a sticking point. Chinese financing of the deal also is a roadblock.

Both countries want to put a thumb in the collective eye of the U.S. and Europe - a short-term prescription that will make both countries feel good, but a long-term prescription for failure. Both Russia and China need the West more than the West needs them.

We also had a case of dueling Fed regional bank presidents today.

The combatants were New York Fed chief William Dudley and Philadelphia's Charles Plosser. The two represent opposing camps in the Fed. Dudley, a dove, is more closely aligned with Chairwoman Yellen. Plosser is a hawk whose views can't seem to find a lot of traction.

Discussing inflation, Dudley said, "My own view is that 2% is not a ceiling. I would expect that we would spend as much time slightly above 2% as below it. If inflation were to drift above 2%, all else [being] equal, then we would tend to resist such a rise [in rates]."

"Drift" is the operative word. That means maybe 2.1% inflation to 2.3%. Above that, the alarm bells would sound, as pointless as the number is in the bigger picture.

Dudley also spoke about entrenched unemployment, a consideration that could "dominate because we would be further from the unemployment objective than we are from the inflation objective."

Dudley also confirmed something we already knew. The pace of unwinding and the potential future rate increases will proceed slowly.

Philadelphia Fed chief Charles Plosser said in another address that the Fed may have to raise rates sooner than expected.

"As we continue to move to our 2% inflation goal and the labor market improves, we must be prepared to adjust policy appropriately," he said in a speech to Women in Housing and Finance in Washington.

"That may well require us to begin raising interest rates sooner rather than later."

Thirteen ways of looking at a blackbird...

As always, wishing you good trading,