Golden See-Saw

She's up - nope - wait a minute - She's down - hold on - She's back up a bit...

No, I am not referring to a horse running a race but rather to gold. Talk about some wild price action. So many cross currents and so much volatility... trying to trade gold on a day like this is an exercise in futility except for the most short term of traders, namely the scalpers.

The first mover this AM was an "out of nowhere", surprise rate cut over in the Euro Zone. The initial reaction to gold was "Yippee". Up it went on ideas of ultra loose monetary policy in that region of the globe. Shortly after that sent gold higher, US GDP data came in much better than expected and that pulled the rug completely out from beneath the metal as the Dollar surged higher on notions that the "TAPERING" was back on once again.

Traders were whipsawed severely this AM as both sides found something that they could trade off of but neither side got a clear advantage, YET, although it appears that the bears are attempting to seize a bit more ground as I type this up.

Bulls looked like they had seized the short term advantage when they powered gold up through $1325 on the rate cut surprise and European easy money policy. When the GDP number came out in the US it further bolstered the US Dollar and that sent the new longs scurrying and the bears began growling. That combined selling dropped the price below the important "13" handle level with gold sinking to as low as $1296. However, bulls came back in and regained that $1300 level.

Although the metal remains lower, it is still holding that 13 handle. It is IMPERATIVE that it do so. If it does not, look for a new push to begin soon that will test the resolve of the bulls as the bears try to take it down towards $1280 and perhaps even $1270.

As stated here frequently over the last couple of weeks - the key driver for gold right now remains the US Dollar. When the Euro is sinking over 1% against the Greenback and the USDX itself is up nearly 0.9% on the day, gold will face formidable selling pressure.

Also, crude oil is sinking yet again today having given up yesterday's short-covering rally induced gains.

Let's see what we get as the session wears on today before drawing any further conclusions at this point.

Have you noticed that today the "good news" ( I say this with all manner of sarcasm) about the US GDP number which has started the early TAPER TALK once again, seemingly has no impact on the S&P 500 for now?

Gee - I wonder if it can reach 1800 before Thanksgiving? Yep - there isn't a worry in the world about the state of the US economy. The VIX, Volatility Index, remains mired down near multi-year lows. Complacency rules supreme here in the US.