Solid Profit-Taking, Sell-Off in Commodities

Very solid and broadly-based sell-offs are occurring in the commodities markets today, including agricultural commodities (grains, some softs, gold, industrial metals, and crude oil). Gold has sold off almost $30 per ounce, and crude oil has told off nearly $4.00 per barrel from its recent highs. Of the most liquid commodities, only cotton is higher and has locked limit up for the second day in a row.

The most liquid commodities have been sold, which suggests to me that this is speculative profit-taking or other traders liquidating losing long positions that they placed at overbought price levels. I consider this to be a very good opportunity to buy into the dips if this correction is short-lived. If, however, the sell-off continues over several days, this could be a correction in commodities prices that may be needed and healthy. Could this be a pin prick in what some are calling a commodities bubble? Only time will tell!

DBC ETF (Powershares Liquid Commodity Index)

Crude Oil

Gold
Cocoa

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