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Last Tuesday oil fell more than 3 USD per barrel after peaking at its 32-month high on Monday. Also, some Economic gurus say that the black crack might have already gotten so expensive that market junkies won’t be able to sustain their addiction to it. As for gold, demand for ’em bling blings fell by almost 1% to 1,451.73 USD per ounce. Word on the street is that the safe haven assets fell when investment firm giant Goldman Sachs announced that it has turned bearish on it.

Easing tensions in the Middle East might have also weighed on commodities. From what I’ve heard, Moammar Gadhafi accepted a cease-fire plan and boosted the probability of Libyan crude oil going back into the market. The news might have also soothed a few investors and lessened the demand for safe haven assets such as gold.

In addition, traders might have also decided to pocket their gains and a round of profit-taking began. After all, both oil and gold have reached notable highs since the Fed launched its QE2 last November. Lastly, naysayers point to the weak demand from the U.S. as another reason why commodities fell.

So is it time to sell commodities and commodity-related currencies?

Not really. I say it depends on what time frame you’re looking at.

If you’re like Happy Pip who takes day and swing comdoll trades, you could exercise more vigilance in your long commodity and comdoll positions. After all, many economic hotshots (like Goldman Sachs) are already forecasting retracements, and from what I hope you’ve learned from the top forex education site in Pipsville, markets usually pay close attention to what they say.


On the other hand, if you’re the kind of guy who likes to sit by the beach and drink Long Island iced tea while waiting for your long-term trades to reel you sin some moolah, then I suggest you take a chill pill on the latest commodity selloff.

You see, some believe that what we’re seeing in commodity prices is nothing more than just a pull back and think that commodities are still fundamentally bullish.

For one, the reasons why commodities rose sharply last year (e.g. inflation expectations, Euro Zone debt crisis, and weak U.S. economic growth) are yet to be resolved. I mean, sure we’re seeing progress with the U.S. employment figures and even a bit more cooperation among the EZ leaders, but I have a feeling that investors will need more proof to completely ease their concerns.

Another reason why commodity prices can still rise is that commodities are still expected to attract demand over the next years. China, the second largest economy and one of the biggest commodity importers in the world, is projected to grow by 9.6% in 2011, which is only a stone’s throw away from its 10.3% growth in 2010.

Though I don’t think that it’s time to dump all of long commodity and comdoll trades, I believe that we should at least keep close tabs on the latest market movers make necessary adjustments in our trades. We’ll never know exactly where price action would go anyway. All we can do is prepare.