The US dollar index is showing bearish signal and short term correction is inevitable. The dollar has received a fair amount of gains in a relatively short period of time, therefore as a repercussion retracement is bound to occur sooner or later. US has recorded 3.30% annual growth rate in second quarter of year 2008 but this was led by increase in net export which was cheaper due to weakened dollar during same period. Several currencies hit dream high levels viz. Euro above $1.60, GBP above $2.00 and this made import of the US goods cheap for emerging markets as well as for Euro zone. The University of Michigan's Consumer sentiment Index was 73.10 versus 64 expected but it was corroborated by tax rebate announced by federal government and by this time all rebate expected to be spent by the oil led inflation clobbered Americans. US July trade deficit increased significantly to $62.20 against $58billion expected and jobless claims incessantly enhanced to 445,000 on week ended September12.

The status quo does not forebode well for the US economy in near term so as for US Dollar. Once the King dollar knocks doors of the bears, the funds will start moving towards emerging markets which will lead a must positive revolution in financial and commodity markets across the world. The most awaited investment will be in the Gold, the safe haven commodity, which is ready to take a bounce after embracing 38% retracement of secular 8 year bull run i.e. it is corrected to 38% of its $1033magic figure, the highest level ever achieved.

At present Gold is facing fundamental turbulence due to demand and supply mismatch in the precious metal markets. Cost of mining has been increased noticeably in recent years, thanks to northward journey of wage inflation and costly mining technologies. The golden trio (Barrick Gold Corp, South Africa's AngloGold Ashanti and Newmont Mining Corp), world`s top three gold miners, is confident about good fate of the safe haven commodity. Davidson, a top official at Denver Gold Forum, said “he expected gold supply to fall off year over year, and demand is very strong from India, China, the Middle East and Turkey. We continue to see weakness in the U.S. dollar over the long term, and negative real interest rates, and all those are good for gold."

Euro zone has also not been immune to global slowdown but it has very strong banking foundation which has given additional advantage over the United States. The later is suffering from financial instability. US has poured down billions of dollar as tax rebate in order to enhance consumer confidence and later it also spilled out  huge sum of greenback to bail out housing mortgage giants Fannie and Freddie. But problems for the world`s largest economy are not yet over, now the Lehman Brothers is standing in front of the federal door. Lehman Brothers has lost 53% share late last week. Ultimately it is going to put pressure on greenback which is lone forerunner at this time on behalf of United States. If dollar start weakening the already boiling inflation will start burning which will further invite innumerable undesirable happenings.

Henceforth dollar may lose the steering control over the financial markets which can set the natural boom in the commodity markets and a big drop down in stock & bond markets. Weak Dollar will make commodities like Gold, Silver, Copper and Crude Oil & Natural Gas dearer comparatively. Given scenario insinuates that gold may regain its prestige as safe haven commodity for the investors, which was at some extent tarnished by the slowing demand and rising dollar in recent period when gold traded below $740 on NYMEX last Thursday, September 11. Gold may once again become fair hedging instrument against the falling greenback for investors in future. It may start very soon northward journey which might last for next one and half quarter of year 2008. Silver and crude oil may also join the party along with safe haven commodity. Gold may embrace $950 an ounce level in coming months, crude will adjust its levels to nearly $120 a barrel silver is also likely to kiss $17 levels in near term.