Fundamentals

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The title just says it all! It DEFINITELY is getting harder for gold to breathe! With the dollar gaining fast against all majors, the appeal for the yellow metal as an alternative investment diminished quickly. The metal declined heavily from the $880.00 per ounce levels to $852.00 per ounce as the dollar rally put a halt to the rising commodity prices. No support was found for the shiny metal as the greenback's performance outweighed any possible potential for gold to incline. At the rate we're going, we could witness lower price levels if what investor's think is true.

As for the crude market, prices continued to fall yesterday marking the fourth consecutive day of losses. This was the longest losing streak witnessed in the markets since the beginning of the year. Similar to gold, the appeal to invest in crude eroded as the dollar rebounded strong from its lowest levels to trade at its highest levels in two months. Adding more pressures on the declining crude prices, the strike in Nigeria has ended not threatening supply anymore. After reaching an all time high near $120 per barrel level, crude has fell to currently trade within the $112.00 per barrel levels.

The cut in the Fed's Benchmark on the 30th of April was widely expected and caused the dollar to slightly fall. But come to think about it, this is the first time the Feds cut by only a quarter percentage point indicating that the worse has probably come! Could it be true that the crisis has peaked and is starting to take a downturn? Investors are already starting to believe that this is the last cut to be seen in the markets although the Feds did leave the doors open for further cuts. A lot of confusion is emerging in the markets currently about the future interest rate outlook and where the dollar is heading and that is why all market players are waiting for the Non farm payrolls to be released later tonight to help give a sign on the trend of the dollar. Expectations are for a really bad outcome, but who knows whether we will see a surprise or not

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