By Ken Stier (CNBC)

The specter of a global downturn is keeping commodity prices in flux, but knowing how to trade on the volatility depends on the direction of the US dollar.

“I think the US dollar has further room to move down — that has been a real supportive influence on commodity prices,” Derek Burleton of TD Bank Financial Group told CNBC. He predicted continued “downward pressure” on the US currency, which would create opportunities for precious metals, especially gold and silver.

"I think the Fed is going to continue with some fairly aggressive rate cuts, despite the weaker- than-expected cut last week, so I think the US dollar going down is going to support gold going up,” said Burleton, Director of Economic Studies at TD Bank Financial. “I really think that gold is a primarily a US dollar play.” (See more in the CNBC video here. )

Charles "Chip" Hanlon, founder of Delta Global Advisors, took a contrary view, arguing that “the fundamental backdrop has not really changed in [gold’s] favor.”
Those shorting the dollar last week “were part of one of the most crowded trades ever,” and most were speculators taking short-term profits off the table after the gold’s rise off about 50 percent since August.