Gold essentially held steady today in advance of more data due out later this week from the U.S. Department of Labor. Many analysts and traders are figuring that, one way or another, employment data will drive the FOMC meeting later this month and into 2014.

It should be noted, though, that all the gain in gold was due to dollar weakening and that in so-called normal trading, gold actually was down.

"The expectation that the Fed is one step closer to tapering its bond-buying program continues to keep pressure on the metals complex. In addition to that we continue to see lackluster physical demand," David Meger, director of metals trading at Vision, said today "And really the combination of those two is allowing prices to slide over the last several sessions."

The precious metals were unable to rally even as the US dollar moved sharply lower against the franc, the Japanese yen and Australian dollar, a "reflection of investor antipathy toward the gold market," said Ira Epstein, director of the Ira Epstein division at The Linn Group.

"The problem for gold is that traders have mentally given up on it, they're not worried about all the central bank (money)-printing that's going on in the world," Epstein said.

 In a short sketch scenario, let's take time to consider what ending tapering will do. It will surely raise bond and T-bill rates. It will push up the overnight rate. Banks will pay more to borrow from the Fed.

 This is turn will be passed along to business and then to consumers or directly to consumers in the form of higher mortgages, car loans, etc. This will make all goods more expensive.

 Now, if the economy is really healed, the entire dynamic will push up inflation.

 What will it take before inflation becomes a factor once again in gold and silver trading? And, what will it take before stock loses their luster and an alternative is sought?

As always, wishing you good trading,

Gary S. Wagner- Executive Producer

Market Forecast:

Today's trading activity can be best characterized as choppy, sideways and congested, as we await fundamental reports which will begin tomorrow. Noteworthy is the fact that our intraday high of 1227 is just above our current resistance that we have identified at 1225. As traders await any sense to what the next move of the Fed might be we continue to see moderate pressure in the precious metals markets, even with gold's slight price ascent today.

In my opinion the slightly higher prices we got today were simply due to short covering and not really noteworthy in terms of building a base and moving higher. It is still my belief that in most likelihood we will see lower pricing. The key areas to watch of course will be 1225, 1200 and 1180.

For the time being we will maintain our current stops but we will lower them by Wednesday in anticipation of economic reports which will be coming out on Thursday, and most importantly the jobs report on Friday 

Proper Action

Maintain Gold Short at 1276  stop @ 1261

Maintain Short silver @ 20.47 stop @ 20.50

COT LINK  See previous weeks in Historical Commitments of Traders Reports.

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