Gold

After some initial physical demand in Asian markets, gold quickly backtracked as it was hit by a dose of reality in New York. Also, China lowered its benchmark interest rate, giving the dollar some extra cause for strength.

A small taste of haven demand returned to the gold market today. “Why” isn’t perfectly clear, but there are some theories we’ll flesh out. A strong rise in crude prices can be considered an outside bullish influence on the day, as can a blah Friday in equities trading in New York.

An epic battle was joined between a rising dollar (thus sinking gold), and a solid rise in regular trading that rode the strength of technical momentum.

The investing world again today is hanging on what Janet Yellen, Chairwoman of the Fed, says in Congressional hearings, this time in front of a House panel. Is anyone seriously thinking she will change her tune from yesterday? From the FOMC minutes released last week? Or the press statement issued in late January? What’s the issue, boys and girls?

Yet one more time, Fed Chairwoman Janet Yellen said the central bank would not be raising interest rates anytime soon. Her reasoning was laid out clearly one more time, too. Labor is improving but not completely healthy. Inflation is weak. Some foreign economies are still sluggish or downright troubled.

Gold is off today modestly entirely on dollar strength, regular trading pushing back on the small battlefield. Investors are awaiting two pieces of news before bigger moves are made, as well as looking at a surprise move out of OPEC.

Gold lost more ground today as its haven appeal faded as it seems more likely the EU and Greece will reach some sort of accord on the small country’s debt structure. A slight fall in the dollar (virtually unchanged) didn’t lend much assistance, as the world’s equities markets danced to the Greek tune.

As is their usual pattern, markets can’t decide on what the FOMC minutes actually mean for the U.S. economy as a whole.

The surprise winner today in the markets was – drum roll – Great Britain. A number of economic reports say that GB is in the midst of an economic surge that follows many years in the doldrums. Wages grew a whopping 2.1% in December, although that is an average and much growth was in higher-end occupations. Inflation remained subdued.

Greece, a flea of an economy, is giving big dog EU and other high-powered economies an itch they can’t quite scratch. Consequently, everyone is playing it safe, though they’re not stampeding into haven instruments except for currencies.