Most Surprising Things Today

The least surprising aspect about today's jump in gold prices is not the fact that investors leapt at the bargain price presented at approximately 1311. That would be relatively predictable, especially given what we've been saying about technical support.

It is impressive that once bulls seized the initiative the prices blew the doors off the first resistance at 1321 we've been pointing to and went immediately to test 1331. Of course, the price bonked its head at 1330.50 and moved back down into what still amounts to a solid gain for the day, approximately $12.00.

Even that move up and the backing off are reasonably foreseeable.

At a 7 on the "Surprise Scale," though, is the fact that on Thursday U.S. non-farm payrolls are due out and it is expected that those numbers will be quite strong, going into the 220+K range. That normally would send jitters into gold and silver (the latter of which also is doing very well today).

But there was a report from the San Francisco Federal Reserve Bank, one of the quieter Fed regionals, that stated firmly and unequivocally that interest rates will remain low until the end of 2015. The report is an interesting one, indeed. You can read about it here in more depth.

It tells us at The Gold Forecast that there is going to be a crease in time, perhaps three to six months late this year and into the early-middle of next year during which employment and wages will rise, forcing prices up faster and higher than we've been used to, so gold and silver will be good hedges against such inflation.

Of course, we're reading between the lines and doing a modest amount of hoping.

The ECB also has a policy meeting this week. It is expected that interest-rate lowering and a mild round of stimulus will not be changed a jot. As one Persian Gulf analysts put it, they're waiting for the dog to bite. Better be a big dog because the eurozone's inflation rate is running at a barely heart-beating 0.5%. You can't grow an economy at that level.

But... and here's the kicker to today's letter... the biggest surprise is that today is not only the end of the month of June, but the end of the second quarter/first half and people are adding to their gold positions. A good vibe if nothing else, and markets do go on feelings often enough.

As we said last week, though, beware of volatility as today's thin trading thins out even more, exaggerating any moves to the up or downside.

As always, wishing you good trading,