Why gold and oil falling sharply??????????

People say U.S. dollar weak, inflation high... and suddenly what happened ..What do you think gold price reach 1000 some said 1200... How long it will falling????

even though there is a strong generally upward trend in oil and gold prices, there will always be short periods of downward movements within a longer cycle. this allows for profit taking, and also the processing of new information. especially when a commodity has done as well, price-wise, as gold and oil, there are going to be occasional large swings downward reflecting a sort of correction in pricing.

in the case of oil, new info re supply and demand is coming out constantly, with govmt action being an important factor in affecting future supply. OPEC decisions...even casual comments (remember Greenspan's 'irrational exhuberance' and what that comment did to the market?) can cause large price swings.

It was a commodity bubble. All bubbles burst sooner or later.

Less demand for commodities due to economic slowdown due to credit crunch due to greedy bastards.

well the market is pretty complex and there are a bunch of factors that impact the market> for the recent decline in gold and oil, especially oil, i think that it boils down to two factors. The resurgence of the dollar and simply that it just went up too high and too fast.

Recently in the market, the dollar has been gaining value against currencies like the yen and euro, thus the dollar increased its value. Since it increased, the dollar had more purchasing power and is able to buy more quantity of a resource for the same price, or buy the same quantity for a lesser price. This has been the case in recent weeks. Also when you look at the market when these prices of gold and oil were escalating, the value of the dollar was going down as well. This helped shoot the prices up since the dollar was less in value and took more to buy the same amount of quantity of oil and gold.

The other factor that is playing into this is that oil and gold had gone way too much. Demand of oil and commodities of China and India had initially and gradually been increasing the prices of oil and gold. What happened was that the price was going up because demand was going up, at the same time since oil price was going up, profits decreased from US companies and caused for a weaker US economy. Since the US economy is the biggest in the world, when it looses money and value, the price of items like gold and oil go up. In response to this spike in oil, people across the world could afford the higher prices, they decided and were forced to cut consumption. This caused demand down. Once the price of oil decreased, the US economy rose in value and the strengthened the the currencies. The currencies had more worth and the prices of gold and oil fell.

Its hard to predict where prices will be in this very volatile market. OIl will continue to fluctuate until alternative energies are more in use. I do predict that oil is going to stop falling around $100 a barrel, and will then rise again. Gold on the other hand is tied to the strength of the economy. Since today's economy is based on oil prices, gold will be ultimately tied to oil prices, so the price of gold will gradually increase we cut dependence to oil.

Another little but of info about oil is that saudi arabia and other key exporters of oil have peaked in their production. this means that they arent finding new reserves to replace the ones that are used up. This will indefinitely drive up the price of oil in the future, and thus gold, until we rid ourselves off oil

So what happened, you bought oil at $135 and now you're worried?

My recommendation is you look at the history of commodities, such as the Commodities a Chart Anthology by Edward Dobson.

You will see that there is practically no limit as to how high or low a commodity will go after performing a reversal.

Many people think that since gold and oil were recently trading "high" that they must return to those prices. This is not necessarily true. It's entirely possible oil will fall to $100 in August or Gold will fall to $800, and that they may never return to their previous levels.

Basically the "commodity bubble" theory is probably accurate.

The demand for gold is usually seasonal, even though the production of gold is not. Summer time is when the demand for gold goes down because people in asia don't buy as much of it during this time.

But in autumn the demand for gold usually increases. And this increases the price of gold too. A lot of arranged marriages take place in India during autumn. And the brides are given a lot of gold during that time.

But also many investors now believe that with the falling price of oil, inflation will come down. And lower inflation will decrease the demand for gold.

But the thing is that declining oil prices might be a sign of slowing economic activity around the world. Which could mean that a nasty recession is on its way. And if this trurns out to be true. Then the gold price will probably go up again. People usually hide their wealth in gold, when the economy gets into trouble.

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