DUBAI (Commodity Online): Commodities prices remained strong last week, despite some volatile gyrations. Gold and silver experienced sharp declines early in the week, but sprung back to higher levels with surprising rapidity. This suggests strong underlying investor demand.

Even as the U.S. dollar showed signs of possibly having made a long-term base and started to recover last week as precious metals and petroleum prices were showing strength. This is in line with these reports’ contention that recent increases in investor opinions that the global recession is moving toward a conclusion and that an economic recovery is likely to take hold over the next few quarters has been a major factor behind investor demand for commodities.

The dollar’s trading patterns have been important, but may have had a secondary level of importance to investors. Investors are accelerating their re-deployment of capital, moving back into commodities.

The view is that demand for commodities will recover faster and stronger than supply, pushing prices higher. While this investment pattern of moving into commodities may be expected to keep commodities prices high and strong in the months ahead. This week, profit-taking may test investors’ convictions, however.