Gold

In spite of the continued surge of the U.S. dollar, gold is eking out a gain today thanks to regular trading activity. The dollar dragged gold down by 0.35% and regular trading pushed it up about 0.55%. Silver was more or less in the same boat and both leading precious metals inched up marginally to end the week.

Currency fluctuations again are helping to drive prices in the precious metals markets. Gold is resisting the force through up-trending regular trading but silver is having no such luck.

Early in the trading day the U.S. dollar rose against the euro on speculation that during the current European Central Bank meeting, the bank’s head, Mario Draghi, will push back hard against a cadre that wants to start “tapering” asset purchases. However, as the afternoon wore on, the dollar moved back to even with the euro and then went slightly lower.

The euro was down a hair against the U.S. dollar. The yen and British pound were up. It’s no surprise there should be conflicted signals among trading trends given the mixed messages coming out of the Fed.

Gold is up today, winning a few dollars from both dollar weakness and regular trading. It may not be time to break out the champagne, fundamentally speaking, but the week is off to a good start for gold bulls. At 4PM, spot gold is up around $4.00.

There was a torrent of data and commentary to end the week today, which pulled some haven bets down but pushed equities and the dollar up.

We are entering a phase in which we have to begin discussing fairly consistently the odds for a December rate rise. We are already leaning, on a fundamental basis, away from December, a minority position.

The hawks’ argument goes something like this: Raise rates now and slow the economy so the Fed does not have to raise rates more vigorously later and possibly cause a recession. Let’s say for a minute that rates right now are at 0.50%. So, if rates are raised, say twice in the next three FOMC meetings, the economy will be slowed by a factor of X.

Despite reasonably strong upward movement via regular trading, gold took it on the chin because of a surging U.S. dollar. Silver met the same fate but without the backing of regular trading efforts. Gold was off around 0.55%; silver was off 1.00%

The dollar was up almost 0.75% against the euro and nearly 1.90% against the British pound.

Although the biggest story of the day was rising oil prices, let’s talk about gold first.