Betfair Official Blog

Price of gold drops. Big Ron rushes to the jewellers

Daily View - 1st April...

Has the big run on commodities come to an end? Falls in oil, silver and gold over the past few days come after all three failed to regain their highs after the initial sell-off of a few weeks ago. For the first time in quite a while the downside looks more probable than the up, and the attraction of precious metal 'protection' at these prices no longer seems quite so secure.

With the Dollar having quickly reached quite extreme levels (rather than engaging in a long slow decline) the potential for further currency-induced strength in the Dollar-denominated commodities has been somewhat reduced. For the Europeans or Japanese, the price of Gold for instance, equates to only around $730 in local currency if you take into account the falls in the greenback. For investors from these centres the risk now becomes 'twin-pronged' with any further weakness in the Dollar and a falling market giving a double whammy to values.

The indices are all looking to open slightly to the downside this morning with the FTSE called 15 points off at 5685 and the Dow down at 12225 off some 35 pips. This is not exactly significant but is slightly disappointing as the Nikkei and Hang Seng put in solid trading performances overnight.

Resistance in the FTSE (as mentioned yesterday once more) remains at the 5720 level and after the strong bounce yesterday traders will be hoping that sellers will become nervous below 5630.