Gold, silver, crude oil turning bearish

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Gold and silver futures slumped Wednesday as the euro weakened, prompting a rally for the US dollar. Euro dropped to a three-week low against the dollar, as investors unwound risky trades in commodities and higher-yielding currencies and bought back the greenback in a flight to quality bid.

Crude oil dropped more than 5% to trade below $100 a barrel. Traders were focused on the slight jump in U.S. fuel inventories, which resulted in a significant price drop that only worsens some negative views.

Gold for June delivery lost $15.50, or 1%, to settle at $1,501.40 an ounce on the Comex division of the New York Mercantile Exchange.

Silver for July delivery declined $2.97, or 7.7%, to $35.52 an ounce. Fears that Greece may be on its way to a debt restructuring dragged down the euro.

As long as the uptrend line is intact, most investors may not be willing to sell short, or at least not yet. As a sell signal should be considered the point when the price breaks bellow the uptrend line. A short trading halt only occurs when there is high volatility in the price to give the market a little breathing space.

Traders appear to be concerned about the pace of economic growth in the coming quarters.  “Roubini questions earnings optimism” reports. In his opinion, profit margins and sales will be suppressed, because of high oil and commodity costs, weak pricing power, production expenses rise as hiring begins. Combined, these factors will result in slower economic growth worldwide.

Many analysts see the commodity declines as a long-term positive for the market, giving some relief from higher commodity costs to consumers and companies.

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