A Short Story

Today gold rose modestly, slowly and steadily, early in the day before settling back, holding on to a roughly $5.00 gain into afternoon trading.

Trading has been very slow as we head into this week's FOMC meeting tomorrow and Wednesday. This has kept a lid on activity in gold as well as silver, which is also up mildly today. Fear of what the Fed might do with rates is holding everyone back, although there is a very good to excellent chance that rates aren't going anywhere even as QE tapering continues to its logical ending later this year.

We can conclude that most of the buying that caused today's little bump up was based on short covering and bargain hunting.

However, the broader market factors that were in place Friday are still with us.

One influence bearing on every single facet of the economy is a general unease with the strength of the recovery. A case in point is the $12.2 trillion that is parked in U.S. Treasury paper, yielding very little - the rate has been steady within a modestly wide range. Today the 10-year is right around 2.60%. This implies that the big money is forecasting a sluggish economy for some time; that there is a grudging acknowledgement of satisfaction with the yield, and there's an innate conservative approach to investing hovering about.

It might be helpful to acknowledge now that today's floor traders - the youth brigade - came of age in the worst of the howling gales of the recession. We may be seeing a "Great Depression" effect in their approach to finance.

Crude recovered a bit today, although Brent is down, the latter reflecting perhaps the uncertainty in the UK-Scotland vote upcoming. That vote is also helping to push down the GB pound and the euro against the dollar although much of the Forex movement is toward the yen.

Equities were mixed today and even a very bad day on the NASDAQ did not spell much in the way of an impetus for precious metals to rise.

We have to note again that, despite intensifying fighting in Ukraine, war maneuvers in that country with NATO troops on the ground, and a lot of bellicose oration on the part of the Russians, gold received no boost from the regional woes.

Likewise, as the winds of war begin stirring more strongly in Iraq and Syria, no effect on precious metals seems forthcoming.

U.N. peacekeepers were withdrawn from the Golan Heights border between Syria and Israel. We can safely assume that Al Qaeda and its affiliates and/or ISIL stand read to fill that vacuum. However, if there were one sure provocation that would suck Israel into the fighting, that would be it. (Probably an attack on Jordan would involve Israel quickly, too.)

So, we await word from the Feds on Wednesday. We think they will hold pretty much steady on their path.

As always, wishing you good trading,