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This is the commodity to play: Gartman

Investors looking for a buy should still look to gold, even as the U.S. dollar rallies, according to commodities king Dennis Gartman.

While the greenback has strengthened in the past week, Gartman and other market watchers argue that bullion is still interesting to watch given its short term trends versus the dollar.

In a research note this week, Wells Fargo Investment Institute said the commodity appeared "oversold", and was ripe for a bounce back in price.

"I find it fascinating that gold has held reasonably well, even tries to rally as the dollar has gotten stronger over the course of the past six or seven days," said Gartman Tuesday on CNBC's "Futures Now."

The dynamic, he said, is "atypical, and I think it tells me something." However, the "better trade here," Gartman says, is to own gold in terms of the euro currency rather than the dollar.

Gartman is generally bullish on the dollar and should the currency go up, gold prices are at risk of dropping down. The euro, by comparison, has struggled against a basket of currencies including the dollar.


Slippery oil patch?

While investors may still want to keep their eye on gold, there is one big commodity market that they should be careful of, according to Gartman.

Crude oil has stayed above $50 since last week, but the oil rally may end up stalling once more as domestic and international factors may bring oil prices down once more.

More specifically, oil's supply concerns may rear its ugly head once more and drive crude down.

OPEC's commitment to supply cuts are " very much under focus and traders are questioning the supply part of the equation because the number released [last week show] that OPEC has increased its production to its highest level," said Naeem Aslam, an analyst at research firm Think Markets.


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"This is not a great message when you are talking about supply cut and your credibility is already being questioned," Aslam added.

While Saudi Arabia and Iran have agreed to cap production, Gartman believes thatRussia may not do the same. While the Russian government has said that it would follow both OPEC countries' lead, the head of Russia's state-owned company Rosneft has questioned why the oil giant should limit its production.

On top of international factors, Gartman also warns that oil drilling companies could also ramp up their activities should oil prices climb higher. "Wells that had been drilled, that had been capped in the United States are coming back on stream, and new production, new drilling is going to take us back," said Gartman.

This means that oil supply would rise, perhaps still outpacing demand, which bodes ill for oil prices.

"Where's crude oil going? On balance it's going lower, not higher," said Gartman.

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