Tuesday, 15 Dec 2009

Precious Metals are Reacting Closely to Fundamental Data

It is no secret that equities and commodities are known to track the value of the U.S. dollar. However, recently we have experienced a break in the reverse correlation between the price of oil and the dollar, but not with gold. It appears this negative correlation continues to hold and could be a major factor in the trading of spot gold.

Trading of the dollar and gold are beginning to show signs of their traditional trading patterns, rising on positive U.S. economic news and falling on negative news. This began with the previous U.S. Non Farm Payrolls and may continue into this week's trading.

Currently we are seeing heavy buying near the $1100 price level as the price of spot gold has failed to break this major support line. If the price of spot gold can exceed this lower level, traders may see an opportunity at this price to enter into the market as spot gold prices could continue their decline.