As a reminder to Members, due to the Easter break we will not be publishing our usual report this week. Normal service will resume from Friday 28 March.

Given the extremely volatile conditions we have published a market comment relating to the Fed's recent actions and the Bear Stearns drama. Please refer to FAT106 on the website for details.

Events in the markets continue to move very fast, and on Wednesday the precious metals, oil and agricultural futures all sold off quite heavily yesterday, down between 4 percent and 7.5 percent (in the case of wheat). Gold and oil are getting most of the headlines, having both fallen nearly 6 percent in New York Trade and are falling in Thursday's Asian trade. In gold's case, the sell-off is being attributed to the Fed's rate cut on Tuesday being 'only' 75 basis points - we think this is nonsense.

Given the huge amount of uncertainty and official intervention taking place, financial markets are highly unstable at present. With the global deleveraging process continuing, investors are selling assets that have done well over the past few months to pay down debt in other areas. In other words, 'good' assets are being sold to cover losses on 'bad' assets.

We commented previously that gold would struggle for a while around the $1,000 mark before moving higher. This tends to happen around symbolic price levels. Did we think gold would get hammered by $60 in one session? Not at all. But riding the bull is not easy, so Members must learn to expect the unexpected.

We could rationalise the overnight drop in commodity prices in a number of ways, however, our charting analysts simply suggest that the precious metals and oil have suffered nothing more than a correction in an ongoing bull market. 

The strong upward trend is still in place and no critical support levels have been broken. The charting view supports the strong fundamental backdrop for precious metals and commodities, i.e. the Fed's number one priority is to avoid deflation and to do this they are actively trying to create inflation. Bernanke's actions over the past week bear this out.

We will provide more in-depth analysis on why we think the gold price run is not over by a long shot in the next few weeks. Until then, maintain exposure (and/or prepare for buying opportunities). 

In a market that has been tanking badly, the precious metals and commodities have exhibited extraordinary strength. At this stage, a correction is a healthy development, so don't be surprised or shaken from your positions.