Short And Sweet

Today's bounce caught many gold bulls off guard. But, when you ponder that the European Central Bank took bolder-than-usual moves - very unexpected given their track record of under-delivering on big promises - traders could only react as quickly as possible.

The ECB cut interest rates again to negative territory, which importantly establishes what is known as a negative deposit rate. That means that commercial and investment banks will have to pay to park their money in the ECB ledgers. Further, it means that banks will have to try to find someplace to invest their money so it doesn't sit idle or actually cost them money to leave lying around.

The ECB, through chairman Mario Draghi, said it was prepared to take other unconventional stimulative actions, which were left unenumerated but could include the continent's version of quantitative easing.

"What we saw today is another big central back deciding they are going to have to get the same playbook" as the U.S. and Japan, said John Forlines III, chief investment officer at New York-based JAForlines Global Investment Management. "The grinding path higher for risk assets is up."

Apparently gold is in that basket, which makes some sense because as we know gold has recently been struggling.

The move into gold might also be an indication of some dithering on the part of banks and portfolio managers heavily involved with the eurozone.

Tomorrow will give us some interesting insight as to where employment trends in the United States are heading. Yesterday, ADP reported weaker-than-expected job growth in May, and we also discovered that first-time claims for unemployment benefits rose by 8,000 last week. (That was in line with predictions.)

On Friday we receive the Department of Labor's "official" new jobs numbers. They would have to look pretty grotty to make the Fed re-think their current course of tapering, but it might throw a scare into equities if the numbers are substantially lower.

That, in turn, would be very good for gold because the stock markets have been siphoning off lots of live money from precious metals.

As always, wishing you good trading,