With A Mighty Assist

With a mighty assist - a shove - from dollar strength, gold resumed its downward trend again today. The dollar was up against the euro, GB pound and the yen.

The greenback's strength was instigated by a number of data reports today that showed great vigor in the U.S. economy.

U.S. GDP was revised upward from a very vigorous 4.2% even higher to 4.6% for the second quarter.

Business investment expanded by a revised 9.7%, up from 8.4%. Corporate investment in equipment and property was also revised upward.

Corporate profits rose from a previously estimated 8.1% to 8.4% in the second quarter.

It is doubtful the torrid pace will continue in the current quarter, but growth is expected to be substantial. Remember that even a 3% year-on-year expansion in the U.S. economy means growth of around half a trillion dollar.

Even with the rosy news, we should remember that, at the September 17th FOMC meeting, Chairwoman Janet Yellen said, "The labor market has yet to fully recover. There are still too many people who want jobs but can't find them." So, calculate that communication when you think about imminent rate rises from the Fed.

All three U.S. stock exchanges roared back to life, recovering most of yesterday's shuddering losses, the NASDAQ performing best on the day as concerns about the tech sector melted after the foolish false alarm over Apple's "bendable" phones.

There has been some chatter that hedge fund liquidations are behind the drop in the S&P 500, focusing on the Swiss National Bank. This rumor contains an even odder twist - it says that the funds are "rebalancing toward Europe." This seems like an extremely odd time to jump into European equities and makes us think that someone read the old dictum wrong and decided to sell on the rumor and buy on the fact.

Certain components of the S&P showed very glowing profit margins as the third quarter winds down. It is earnings hat, in the end, will drive the S&P forward for the upcoming last quarter of 2014.

Meanwhile, in moderate to light trading with an hour left to go in the day, gold is down a bit over $4.00 while silver is sowing a 14-cent gain for the day. The other precious metals - palladium and platinum - were beaten up severely, the former down over 2.5%.

As always, wishing you good trading,