Spot Gold prices traded slightly lower around $1,059/oz levels as the dollar bounced back. But Gold prices on the MCX gained 0.7% till 4.00 p.m. IST as the Rupee weakened and limited the downside in the yellow metal on Indian commodity bourses. The latest data releases from the US indicate that the economy is out of recession and the government might soon consider pulling back the stimulus measures. This would also mean a rise in US interest rates could be around the corner. If not the immediate meeting, then interest rates could rise soon after that and that could give the US Dollar Index a push to the upside. The rally in gold prices could be limited till the fractured state of the dollar. Once interest rates rise then the dollar could revive as its appeal could rise. Hence, we expect gold prices to continue trading higher only till the dollar remains weak as it makes the yellow metal look attractive for holders of other currencies. Crude oil prices came under pressure today on expected data tomorrow that could show that oil inventories gained for a fourth week. A stronger dollar added pressure on the downside. If the dollar index weakens in the evening session on the back of positive economic data then oil prices could bounce back today. Positive data raises prospects of a rise in demand and thereby adds fuel to the upside. Copper prices traded lower by 1% on the LME till 4.00 p.m. IST as a stronger dollar made the metal look expensive and unattractive for holders of other currencies. The red metal has started the month with very less direction and continues to take cues from a combination of economic data, fundamental developments and currency movement. A two-day US Federal Reserve meeting which is expected to begin later in the day will provide direction to base metals. The US Fed is not expected to raise interest rates in this meeting but until then Copper prices could consolidate. Also, the dollar could strengthen till the final decision on interest rates is announced and may add pressure on copper prices. Outlook The US is expected to announce economic data on factory orders and vehicle sales today and the data is expected to improve. If the data comes in as per expectations then it could lead to a bounce back in risk appetite, thereby lowering demand for the dollar. We expect the dollar to weaken today on the back of positive data announcements and provide a push to dollar-denominated commodities like Gold, Copper and Crude Oil. However, the upside in prices may not be huge as markets await comments by the US Federal Reserve on growth in the United States.

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