Gold. Oil. Dollar. Where art thou taking us?

Large investment firms that often drive our markets tend to look at the direction of commodities and the dollar to better assess risk appetite. Strong dollar, weak commodities. Weak commodities, weak emerging markets. That’s the bare bones of it. What’s up with these three items this month? Dollar strength is hurting oil. That can hurt oil company stocks. Many firms need break-even prices at around $55 for crude, based on today’s earnings release from BP. Deep sea drillers would like $60 oil to improve margins. Demand for oil isn’t what it used to be, mainly due to China, so the market may have found its range for the year, with $60 being on the higher end of the scale. London-based forex firm, ThinkMarkets, says the dollar will also be dependent on U.S. fiscal policies and not just monetary anymore.  It is unclear what the Republicans will do on the tax front and what Trump will do with tariffs. Higher tariffs will likely mean a stronger dollar, which will be bad for risk assets in general. Gold is simply waiting in the wings at this point for some sort of catalyst, either from Washington, London or, later this year, in Paris when French voters may elect a euro-skeptic that will rattle markets. Fundamentals are still the same in gold and a pullback is in order, ThinkMarkets analysts said. They think gold hits $1,250 per ounce.  It’s now $1,230 for the February contract. State Street’s SPDR Gold (GLD)GLD 187,93 +0,56 +0,30% is up over 7.2% this year already, the complete opposite of oil. Physical gold demand is still sold in China and India, so that will keep some support, ThinkMarkets believes.