The events in Ukraine this weekend could have a big impact on the gold trade.» Read More
Stocks held near session highs Tuesday, with the Dow Jones Industrial Average shooting up to its highest level ever, following an upbeat ISM non-manufacturing index and amid ongoing monetary support from the Federal Reserve.
So far, the Dow is up nearly 9 percent in 2013, surpassing the 7.3 percent gain for all of 2012.
(Read More: Dow Smashes Record: End of the 'Lost Decade'?)
It seems the Fed has failed to spark a spike in commodities.
Federal Reserve Chairman Ben Bernanke strongly reiterated the value of qualitative easing in his semi-annual testimony before Congress last week. He made it clear that QE, the Fed's low interest rate policy, could continue well into the future. What makes this significant is that there has been some dissension within the Fed, and some seem to believe that the policy should end early.
(Read More: Gold's 'Death Cross' Could Tarnish the Yellow Metal)
It's a metal whose performance tends to track the S&P 500 — copper. And over the past two weeks it's been falling like lead.
So with stocks soaring, what's the problem?
(Read More: Stocks Lower on China; AAPL at 52-Week Low)
Well, copper futures have been driven down by attempts by the Chinese government to take the air out of an impending real estate bubble. Stricter down payment ratios and higher taxes on speculative property are among several measures that could be implemented.
Facing a myriad of headwinds, Brent crude oil slipped to a six-week low below $110 per barrel on Friday, prompting some professional traders to think black gold will likely suffer further declines.
(Read More: Brent Crude Slips to $110 on Global Growth Worries)
Brent crude oil slipped to a six-week low below $110 per barrel on Friday, weighed down by growth worries as political gridlock brought the prospect of massive U.S. government spending cuts and on disappointing European industrial data.
It seems crude could fall further.
The price of crude oil dropped sharply Friday morning after seeing new swing lows and a close below the 200-day moving average. This market is poised for another leg lower, as the U.S. dollar is making new swing highs, and putting extreme pressure on commodity prices.
If the stock market continues to move higher, gold could continue to struggle.
In the last couple of days, we have identified a important correlation between the two. When the S&P 500 index plunged from 1,524 to 1,484 on February 25, we noticed a rush for safe havens, including bonds, the U.S. dollar, the yen and finally, gold.
(Read More: Gold On Track for Record Monthly Losses)
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