A Slight Rebound

On rumors that physical demand for gold would be resurgent in China and Iraq, prices rebounded a bit.

This happened in spite of the fact that there was a healthy jump in the value of the dollar, which took a few bucks off the price of gold.

There was also a good deal of bargain hunting on the exchanges with many traders getting and spreading the sense that the recent mini-bear has punched itself out and trends will return to the first quarter of this year

That is all well and good, but there are a number of loose-cannon factors out on the battlefield that need to be considered by bulls.

Until Yellen and a few other strong Fed doves convince the markets otherwise, the fear of an interest rate hike hovers like a buzzard over gold and silver. We'll see this fear play out as the economic data for March is released, starting with the unemployment report on Friday. If today's private ADP report offers insight, it seems as if the "official" report from the BUreau of Labor Statistics will look good.

According to ADP, 191,000 jobs were added in March. At that pace, job growth for a 12-month cycle would be 2.3 million, a respectable level to graduate to, but scarcely summa cum laude.

But "looking good" is also looking bad for precious metals. It seems that with every factoid that is issued concerning U.S growth, markets take the sledgehammer to gold. Silver is simply suffering almost every day for a host of reasons, a good portion of which is related to declining industrial and decorative-arts demand.

"People are betting on increased physical buying and bargain hunting at these levels," Phil Streible, a senior commodity broker at R.J. O'Brien & Associates in Chicago, said today about gold. "This may be temporary, as prices could head lower because of expectations of higher interest rates."

The question is, "How long, strong and deep will those bull bets be?"

On the other side of the pond, inflation in the Euro zone was flat to slightly negative. That leads to speculation that the European Central Bank will lower its key rate to 0%, or turn to more creative stimulus measures as did the Fed with its various rounds of quantitative easing.

Neither the jobs report in America nor the inflation report in Europe jiggled the Richter detector much but both should be factors as the next ten days of trading proceed.

As always, wishing you good trading,