Small Reactions

Gold is about midway between its high and low for the day as we move into late afternoon. In regular trading, it found strength, but a U.S. dollar that started out lower early in the day has gradually moved almost to practically unchanged, eroding that extra oomph a soft dollar gives bullish movement.

Gold is circling the field, round and round, looking for a suitable landing place. It seems bound in a rather large range, 1150 to roughly 1300, but a range nonetheless. There is still plenty of opportunity to make money on trades. The reason for the indecision on investors and traders’ parts is that it is unclear to many of them when the Fed will be raising rates. That mystery seems to have those involved with gold hopping from foot to foot. The Greek question is still hanging in the air, too.

We actually don’t think it’s all that difficult to figure out the Greek issue. The core EU countries will ease austerity and spin the Greek debt farther out into the future. A bigger worry is what will become of Greece? It is one of a handful of countries in the EU that need drastic investment, modernization and innovation investment, not simple band-aid bailouts.

The Fed question may be slightly harder to deconstruct, but given the general tendency for the U.S. economy to show robust growth and then sputter repeatedly tells us that June is still the earliest. As we’ve said many times, even when the Fed does raise rates, a quarter point is not going to give anyone whiplash. It’s inconceivable with the data we have in hand now that the rise could be any larger than that.

Equities markets fared well today, the Dow, S&P, NASDAQ, all of Europe and Asia except for the Nikkei up. The Dow was up a modest 0.25% on renewed strength in energy. The Dow is looking to close over 18000 for the first time since late December.

Speaking of energy, crude bounced back today, West Texas Intermediate up around 3.00% and Brent up 3.80%. Even natural gas was up, though not impressively. So, gold took some cues from a commodity it often trades in tandem with, although the fundamentals of oil are quite a bit more robust than gold’s right now.

The U.S. 10-year bond seems as if it is poised to close above 2.00%. This reflects at least a smidgeon of optimism concerning the Greek debt deal. Keep the fireworks in the closet for now, though.

International hot spot, eastern Ukraine, seems savage enough. If you want a real gauge on what western countries are doing watch defense stocks. If they start moving up, you know new armaments are headed to the region being hacked and shelled and burned by comrade Putin.

Wishing you always, good trading,