What’s Going On With Gold?

On Wednesday, gold fell to a two-week low with investors nervous that the precious metal may have further to fall.

"(Gold) trades inversely to the dollar and in tandem with equities," explains VTB Capital analyst Andrey Kryuchenkov. Considering the greenback is getting stronger and the stock market weaker, that doesn’t bode well for the gold bulls.

However, that’s not to say gold is heading into a freefall. "I think we can hold on at $925 -- there is pretty good support there -- and I think we will not get lower than $920," says Kryuchenkov.

In fact, there could be some bullish catalysts for gold bugs largely triggered by China.

"There is some concern that the (Chinese) government could try to tighten up credit conditions in China, which could be negative for lots of stock markets and therefore positive for gold," explains Daniel Smith, an analyst at Standard Chartered

Meanwhile, the greenback appears to be getting stronger with the dollar index extending gains against a basket of currencies as Uncle Sam attracts safe haven investors.

But that’s not surprising. The dollar typically benefits in times of extreme risk aversion.

So what’s the trade?

It’s hard for gold to do anything but go down with oil dropping this way, explains Dennis Gartman, author of The Gartman Letter. However I agree with Kryuchenkov it should find support no lower than $900.

And if you want to play the metals, look at copper. If Freeport McMoRan pulls back another $2 I’m a buyer, says Gartman.

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Trader disclosure: On July 29th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (FXP) Long Calls; Najarian Owns (MET) Long Calls; Najarian Owns (BAC); Najarian Owns (INTC) Call Spread; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (MS) & Short (MS) Calls; Najarian Owns (MSFT) & Short (MSFT) Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (V) & Short (V) Calls; Najarian Owns (YHOO) Call Spread; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU);Terranova Owns (MSFT), (MCD), (AMZN); Terranova Works For (VRTS) ; Seymour Owns (BAC), (BHI), (FCX), (SBUX), (EEM); Seymour's Firm Is Short (PBR), (PTR)

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