The Grateful Dead once sang that, "When life looks like Easy Street, there is danger at your door." Today's trading action in gold certainly proved their point.

Yet, to our way of thinking there is something seriously amiss with the analysis that says the U.S. economy is picking up so strongly it may warrant a rate increase.

Overcoming the serious drag presented by a rising dollar, gold and silver rose today on the rising tensions in the eastern part of Ukraine. Nobody, especially the equities markets, wants this conflict to go any farther. However, Tsar Putin seems to keep pushing and pushing.

As the week came to a close, gold maintained an equilibrium today, bulls unable to derive much energy from the Fed minutes released Thursday, bears unable to unseat gold as a minor hedge play.

Bull Patterns

Engulfing Bullish = Bullish Reversal - 

With a much smaller assist from the dollar decline today - but with one nevertheless - gold and silver advanced. Both metals are off their highs but holding a tidy gain from follow-through buying.

We can again thank the weakening dollar for the small rise in gold today. without that softness, gold bulls would be about even for the day. As it is, at the close in New York, gold is up $4.60, $.20 of which is from the down dollar.

Despite an assist from a weaker dollar, gold prices slipped about $5 today, taking the leading precious metal below 1300.

All the anxiety over the ramifications of accelerating growth in the U.S. economy was washed away today by a lower-than-expected growth in jobs in March.

The main force driving gold prices today is a peripheral fundamental, namely the strength in the dollar. Dollar goes up, gold goes down.

There are a couple of reasons why this is happening and it really has little to do with the dollar but more with the euro, which is the currency relationship through which we view gold buying and selling activities.

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.