The dollar plunged to a 12-week low against the euro as economic data in the US has been mixed but biased to the downside while that in the Euro zone has shown improvement after enduring a tough period. At the same time, concerns over sovereign crisis in peripheral European countries continue to diminish as debt-ridden economies have been actively implementing fiscal consolidations measures and economic indicators have been better-than-expected.

Crude prices dropped today to trade below $78 per barrel as stocks also managed to slide and thereby reflecting poor sentiment in markets. Gold might be heading for the biggest monthly drop this year, after recording a historic high of $1265.30 an ounce in June. Confidence among investors continue on supporting risk appetite thus, traders are targeting more high yielding assets and stocks, while discarding trades in low yielding assets and commodities, as both are considered a safe investment.

Technical and fund buying coupled with a further decline in inventories for most base metals boosted copper above $7200 to a high of $7283; aluminium to a 10week high of $2113, while lead and zinc hit their best levels since mid-May touching highs of $2057 & $2005 respectively.

A mixed start has been seen so far although the overall tone is a cautious one ahead of today's data, particularly the US GDP reading. The complex will be looking to broader risk sentiment for direction in the coming sessions but with most of the metals having cleared overhead resistance, the technical's suggesting further upside momentum and inventories continuing to decline there is scope for further gains with copper potentially set to target the $7500 area

Courtesy: Anagram Comtrade Limited

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