For now, gold is trading like a commodity, not a safe-haven or a hard currency. The main buyers of gold, China and India, have backed away somewhat. China is in a slowed growth period and India’s rupee is weak, making gold even more expensive. Indian import tax has increased to 8%, further limiting the purchase of gold. The Central Bank of India has even put restrictions on gold purchases. According to the World Gold Council, in 2012, the top global gold consumers were: India which used 864.2 tons, Vietnam used 77 tons and China used 776.1 tons. These statistics make it seem highly unlikely that the price of gold remain low.

The August Gold may trade in a range for the near-term unless it drops below $1323.00. Once it takes out the previous low, then perhaps $1250.00 is possible. The inflation target of the Fed is 2.0% and we are well away from it again, pressuring the gold. In order for gold to begin an uptrend, factors would have to line up. It must break through $1425.00.

• Inflation would have to accelerate.
• The economy would have to worsen.
• The Fed would continue or increase the easing and become ultra-accommodative.
• The European Central Bank (ECB) would increase their monetary stimulus.
• The central banks would have to bump up buying.
• The speculator would have to regain confidence in the gold market.

The data is showing signs of recovery, but not enough to convince the trading community that the US has mended and that it will not backtrack. In a stimulus driven market, all eyes turn to the Fed next week to see what clues may be hinted regarding monetary policy during the Tuesday-Wednesday meeting next week. While most do not believe that any major monetary policies could be changed this soon, it is the unknown factor that keeps the volatility in the market and the potential element of surprise. The International Monetary Fund (IMF) warns that if not dealt with properly, the “tapering” may have some risk in the unwinding. There virtually are no inflationary fears and yet the easing cannot continue indefinitely.

Today’s Industrial Production for May was 0.0% while the previous reading was -0.5%. Capacity Utilization was 77.6% while the previous reading was 77.8%. The Manufacturing portion was 0.1% while the previous reading was -0.4%. The Producer Price Index (PPI) for May was 0.5% while the previous reading was -0.7%. The PPI excluding food and energy was 0.1% unchanged. The US Consumer Sentiment for June was 82.7 while the previous reading was 84.5. The current account for the first quarter of 2013 was -$106.1 billion while the previous reading was -$110.4 billion. The current account is a measurement of international trade balance in terms of goods and services, both imports and exports to monitor foreign trade. The US Treasury International Capital for April was -$37.3 billion while the previous reading was -$13.5 billion. This indicator of US Securities tracks the allocations of financial products in and out of the country. The US Initial Jobless Claims came in at 334,000 down 12,000 giving the marketplace a boost. The previous reading was 346,000. Retail sales for May came in at a 0.6% increase while the previous reading was a 0.1% .

The Bloomberg Consumer Comfort Index Level was -31.3 while the previous reading was -29.7. The Business Inventories for April was up 0.3% while the previous reading was 0.0%. The rally that we have seen through the end of May possibly was Fed induced as Federal Chairman, Ben Bernanke, had stated on May 22nd that the stimulus, due to better data, may be tapered sometime in the future. The volatility has been an advantage to many traders who bought on the dips and took profits on the spikes. This has been a risk-on environment with the support of the Fed. The Fed meeting next week convenes June 18-19, and while traders are not looking for a monetary policy change or “tapering” at this particular meeting, they are looking for cues to signal the ‘when’ factor. This may be a bit sticky as the Fed Chairman is due to retire within the next six months.

The US government has posted a $139 billion budget deficit in May and is still expected to trim again. The smaller deficits are taking a bit of pressure off the leaders, particularly due to the Standard & Poor’s Credit rating boost of Monday. The MBA Purchase Applications Composite Index for the week of June 7th were 5.0% while the previous reading was -11.5%. The Purchase Index portion of the report was also 5.0% while the previous reading was -2.0%. The Refinance Index portion of the report was 5.0% while the previous reading was -15.0%. The Wholesale Trade Inventories for April were up 0.2% while the previous reading was 0.4%. The NFIB Small Business Optimism Index Level for May was at 94.4 while the previous reading was 92.1. The ICSC-Goldman Store Sales for the week of June 8th was -2.7% while the previous reading was 1.9%. The Redbook Store Sales for the week of June 8th was at 2.8% while the previous reading was 2.9%.

Last week, US Nonfarm Payrolls came in at 175,000, right on the money as far as expectations, but no closer to an answer on any Fed moves. The number confirmed that the US is on track for the recovery, but we need possibly 200,000 for four consecutive months to establish a stable job growth according to two prior Fed economists. The Unemployment Rate moved up as a matter of fact from 7.5% to 7.6%. The Average Hourly Earnings were at 0.0% or $23.89 while the previous reading was 0.2%. The Average Work Week was 34.5 hours while the previous reading was 34.4 hours. The Private Payrolls was 178,000 while the previous reading was 176,000. The US Manufacturing Payrolls were down 8,000. This all makes it debatable as to whether the easing is necessary, but it seems the Fed is not totally comfortable with pulling the plug quite yet. US Consumer Credit for April was at $11.1 billion while the previous reading was $8.0 billion. Non-revolving credit, such as student loans and auto purchases, were up $10.4 billion. Revolving credit, such as credit cards were up $682.3 million. Consumer spending reflects about 70% of the GDP.

While the US data points to potential growth, there is still the slowed growth in China and potential recession in the Euro Zone to contend with. So far the US has shrugged off a great deal of negative sentiment, but was it due to the Fed? World Bank had stated that the global economy will expand 2.2% in 2013. The move down this week may have been the reality of the easing days coming to an end as the Bank of Japan had left the monetary policy as is in their meeting this week.

The US Dollar and the Stock Indexes seem to be highly correlated and extremely responsive to any conversations related to the quantitative easing. This market has become addicted to stimulus and the reality of the Bank of Japan holding off on any additions to their stimulus brought home the idea that the day of the easing may be closer to an end than we may expect. Bank of Japan’s Governor, Haruhiko Kuroda, kept the $60 trillion-yen to $70 trillion -yen in place for the annual monetary base reasoning that the bond markets have stabilized. He also stated that the central bank will discuss longer funding operations as necessary. The hopes that the central bank would continue to advance its ultra-low interest rates to banks got quelled.

Traders have grown accustomed to the soft cushy words of support and easing from the Fed, the European Central Bank and the Bank of Japan. The markets were also thrown from the German constitutional court considering the legality of the European Central Bank (ECB) buying government bonds from the weak nations in the Euro Zone. The actual statement will take place around September 22nd. Some say that the ECB is independent and others say that the ECB has overextended its mandate. The concern is that Germany has bared the brunt of the ECB decisions to date, shouldering quite a bit of the debt. There was talk of a new “bond” introduction of the “Deutschlandbond” in July. If this turns out to be successful, more such ventures should transpire as well.

The European Central Bank’s (ECB) meeting had held to the previous rhetoric that the ECB will stand by the Euro FX and do whatever may be necessary to stabilize the Euro Zone. ECB President, Mario Draghi, has ruled out the negative overnight deposit rates for now. The ECB held interest rates at 0.50%. Draghi further felt that the Euro Zone would probably return to growth by year’s end.

The Standard & Poor’s credit rating agency had downgraded the US in August of 2011, and now almost 2 years later, adjusts the rating from negative to positive thus reviving the tarnished outlook of the US. The loss of the AAA rating was horrific, creating quite a selloff in the market place. The boost in the labor numbers may have helped but more importantly the unified way that the US has dealt with such things as the fiscal cliff and the slow but steady expansion may have been more influential. The S&P may be focused on economic growth more than the austerity limitations within the US. Stability is the key word and the US strives for it.

At the current level of inflation, the Fed has no pressure to pull-back on the quantitative easing quite yet. It is possible for the “tapering” to begin sometime between September and December due to the improvements in the US economy. The Fed had stated that their targets for “tapering” would be a 6.5% unemployment and/or a 2.5% inflation rate. Former US Fed Chairman, Alan Greenspan, has been outspoken in his insistence that the Fed withdraw the stimulus due to the impact it may have on the country later. It is highly unlikely that anything would change at this June meeting. Fed meetings to follow are scheduled for: July 30-31 and September 17-18. If the Fed stays true to form, they may begin the tapering after achieving either of their targets! One must remember that tapering may not go hand in hand with tightening. The Fed will be walking a fine line to insure market stability and continued growth. It is difficult to project whether the tapering could begin before or after Fed Chairman Ben Bernanke leaves his post. China is also pointing to a slowdown through their economic reports. This market has shrugged off “the fiscal cliff”, slowdowns in China, the sequester, the Euro Zone crisis and potential world conflicts which would point to stability and growth with a healthy recovery. This has not been overlooked by the Standard & Poor’s Credit rating agency as the US outlook was taken from negative to positive.

Gold may hold at the current level or possibly trend between the $1323.00 and $1488.50 range before finding some support. Next week may determine the trend for gold, but it still needs to come back through $1500.00 to gain any traction.

While reaping the rewards of being a gold trader, one must be sure to use stops and money management to stay in the game! Retracements are possible. While I remain very bullish still – use stops – live to trade another day!

Gold

The Sample Trade:
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Please call or email me for the complete recommendation to coincide with your risk tolerance, so that we may apply the correct Money Management. The Weekly Gold Digger is a Free Weekly subscription to receive trading opportunities by email along with fundamental commentary and basic technical points of interest.

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The conflict in Syria, where rebels have been trying to oust the rule of Bashar al-Assad for the past two-plus years, is forecast to continue escalating. But President Vladimir Putin of Russia signed a statement seeking a transitional government in Syria.

"Geopolitical concerns are on the minds of investors and continue to push prices higher," partner John Kilduff with energy-focused hedge fund Again Capital LLC in New York told the publication on Tuesday. "In addition to the tensions in the Middle East there's positive economic news. The economic outlook is improving and that's supportive for oil."

At 10:40 a.m. on Tuesday, West Texas Intermediate crude oil futures rose 0.38 percent, a 37-cent gain to $98.14 per barrel. At 10:39 a.m., Brent crude oil futures climbed 0.41 percent, a 43-cent gain to $105.90 per barrel.

Reuters reports investors were apprehensive due to the ongoing meeting of policy makers with the central bank of the U.S., which is the globe's top consumer of the energy commodity. The meeting is slated to adjourn on Wednesday.

Fed Chair Ben Bernanke is slated to conduct a press conference following adjournment on Wednesday of the Federal Open Market Committee. The loonie often is impacted by U.S. financial and economic developments because of the strong relations for commerce and trade between the nations.

"It's more (U.S.) dollar than Canada specifically in that the (U.S.) dollar is up against all of the majors today," FX strategy global head Adam Cole with RBC Capital Markets in London told Reuters on Tuesday. "I think we're still seeing people shuffling positions around ahead of the FOMC meeting tomorrow. There hasn't been a lot in the way of hard news to digest."

The loonie lost value amid economic data noting housing starts last month in the U.S. climbed.

The Bernanke press conference is forecast to answer many questions swirling about the markets regarding whether the Fed will taper stimulus measures, according to Reuters.

The yen drew down against all of its major rivals except for one as the Federal Open Market Committee is poised to discuss how much longer the U.S. Federal Reserve will implement monetary stimulus measures. The Bank of Japan indicated its current-account balance pushed to a record high as a consequence of Japan's aggressive economy-spurring measures.

"Market participants are uncertain about the outlook for extraordinary policy support being provided by the Federal Reserve and the Bank of Japan," states a client note authored by currency strategist Joseph Capurso with Commonwealth Bank of Australia, according to Bloomberg. "Hedgers such as real money managers and corporates may consider taking cover against the risk of heightened volatility."

Monday losses for the yen against the U.S. dollar surged as high as 0.9 percent, pushing well past its 0.2 percent losses on Monday.

Losses during the first two days of the week come after the yen achieved close to its biggest weekly gain against the U.S. dollar in almost four years, according to Reuters.

Policy makers with the U.S. Federal Reserve, also known as the Federal Open Market Committee, are slated to begin convening on Tuesday and hanging in the balance is the institution's monthly bond-buying program that aims to spur growth and development amid the recovery from the Great Recession. Impacting the body's discussion, which chairman Ben Bernanke will detail following adjournment on Wednesday, are strong retail sales and factory production data, according to economic information released last week.

"From a macro perspective, the market focus will be on the upcoming FOMC meeting, where participants will seek clarity on the aggressive monetary easing stance taken in the U.S.," states a Monday email to the news service penned by analyst George Adcock with Marex Spectron Group in London.

At 11:17 a.m. on Monday, copper futures fell 0.11 percent, a 0.0035-cent slide to $3.198 per pound.

Policy makers delve into stimulus plan
The Fed is likely to pull down its monthly commitment to the stimulus program, which also is known as quantitative easing, according to economists polled by the news service. More colloquially, the stimulus program is known as QE.

But there also is a train of thought indicating that policy makers, should they not opt to slash the monthly purchases, will discuss the matter.

"We stand by our assertion that a reduction in QE is highly unlikely for the foreseeable future," the analyst told the news source. "However, the mere discussion of it can severely dent investor sentiment and psychology."

As of late, the reddish metal has been slipping amid trying times for industry, manufacturing and additional sectors that capitalize on the base metal. Copper is sensitive to worldwide economic and financial developments due to its myriad uses in industry.

"The market remains heavily short and the potential for a further short-covering rally remains elevated," the analyst told the news source.

Indian site to re-open
Also impacting the value of the industrial metal as the trade week kicks off is India re-opening its top smelters, according to Reuters.

Complaining residents prompted closure that lasted roughly 60 days, according to two sources cited by the publication.

Emissions from the plant in Tamil Badu, which was operated by Sterlite Industries, were prompting difficulties with respiration, according to complaints issued by people in the region.

"We have restarted the plant in the presence of the court-appointed panel," a source with the company told the news service. "It should ramp up to full capacity in about five days."

Supplies of the reddish metal in the subcontinent were slashed by the closure, which prompted imports to climb. The reopening of the site is likely to be a welcome development to manufacturers of cables, such as Finolex Cables Ltd. and Precision Wires India Ltd.

But the development also is likely to cut into tightening world inventories of the reddish metal.

The site was closed at the end of March though a Supreme Court decision last Monday indicated that the plant could open again. A court-appointed panel checking on safety visited the facility on Sunday.

Chilean company, workers reach pact
Another factor that is likely to impact the price of the reddish metal is news about a mine in Chile reaching agreement with laborers, according to The Santiago Times. The South American nation is the globe's top supplier of the metal.

The Collahuasi mine generates 3 percent of the globe's copper and almost 90 percent of the 1,090 laborers approved the deal.

"The agreement represents a step forward in Collahuasi's relations with our workers," company owners said in a release.

The energy commodity pushed to its top value in at least nine months during morning trade on Monday amid news that U.S. President Barack Obama granted approval to aid Syrian rebels with weaponry. Iran elected a new leader, who stated he intends to foment stronger relations among the world community.

"We've seen prices rising over the past week primarily over geopolitical worries," commodity strategy head Ole Hansen with Saxo Bank A/S in Copenhagen told the news source on Monday. "We are settling in for a range-bound day of trading and any major moves will have to be geopolitical related."

At 10:19 a.m. on Monday, WTI crude oil futures edged up 0.2 percent, a 20-cent lift to $98.05 per barrel. Brent crude oil futures rose 0.21 percent, a 22-cent increase to $106.15 per barrel.

The Wall Street Journal reports concerns are spreading about the increased involvement of the U.S. in an internal conflict in Syria.

The monetary unit of the world's second-largest economy rose 0.09 percent against the U.S. dollar, noting its biggest advance since the end of last month. The central bank of China pushed up the daily fixing to an all-time high, driving it up by 0.01 percent to 6.1598 on Monday. The U.S. Federal Reserve is slated to convene two days of meetings beginning on Tuesday.

"Investors are pulling back, softening capital inflows, and not only the yuan but other Asian currencies are weakening as well," economist Ho Woei Chen with United Overseas Bank Ltd. in Singapore. "The pace of yuan gains could slow or it could depreciate. But, for the year, we still see appreciation possible."

Governor Zhou Xiaochuan with the People's Bank of China told Chinese television earlier this week that the institution he leads is not deliberately distilling the renminbi to drive competition.

The deficit between the onshore and offshore rates is slowly decreasing, according to The Wall Street Journal.

Center south, the primary growing district in Brazil, utilized 58 percent of all the sugar cane that was processed to produce ethanol from sugar during the second half of last month, according to data released by industry group Unica. As compared to the second half of May from last year, that represents an advance of 52 percent in supplies.

"The rally was partly explained as a late reaction to the Unica figures," states a Monday report emailed to the news service by Kingsman SA. "We may have seen a temporary bottom, but it is too early to say whether it becomes more than that. The funds, however, are very short and once they start short-covering their buying may snowball."

At 9:17 a.m. on Monday, sugar futures fell 0.29 percent, a 0.0005 cent slide to 0.1704 cents per pound.

The sweetener last week dipped in value and neared its lowest value in three weeks, Reuters reports.

Gains for the world's reserve currency against the Japanese yen were linked with the U.S. Federal Reserve preparing to gather for two days of policy meetings, beginning on Tuesday. Fed chief Ben Bernanke is slated to disclose what the central bank will do regarding its economy-spurring monetary stimulus program, known as quantitative easing.

"The changing prospects for U.S. quantitative easing are causing great confusion," chief currency strategist  Kengo Suzuki with Mizuho Securities Co. in Tokyo told the news source on Monday. "The market consensus is that Bernanke will clarify this week the difference between QE tapering and policy tightening and emphasize the point that monetary easing is still needed."

Gains for the shared currency of the European Union against the Japanese yen were linked with economic data noting the euro zone saw its trade surplus push close to a record high in April.

The yen had been at its highest value in about 60 days against the U.S. dollar, according to Reuters.

Weekly recap: 6/10-14/2013

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