Spot Gold prices fell 0.4% till 4.30 p.m. IST and hovered around $1202/oz as a sharp rally in the yellow metal prompted investors to book profits. The rally in gold has been far stretched and profit-booking was inevitable. Technically too, prices are due for correction as the 14-day Relative Strength Index is above 70 and indicates that the yellow metal is overbought. Prices could trade with a negative bias as today’s economic data releases from the US could trigger risk aversion and lead to strength in the Dollar Index. Copper prices slumped more than 1% till 4.30 p.m. IST despite weakness in the dollar as markets awaited economic data on the unemployment front from the US. Risk aversion is on the rise and traders could get into profit-booking ahead of the year-end. Investment funds have also reduced activity and a pullback may be well overdue. Copper also came under pressure as weekly Shanghai data showed the copper stocks gained 3433 tonnes of 3% in the week. Crude Oil prices traded with a negative bias today as the rising inventory scenario continues to remain bearish. Fuel inventories in the US remain high and are sufficient to meet weakening demand. Prices are also trading lower ahead of an economic report which is expected to show that unemployment in the US held at a 26-year high. If the data comes in as per expectations then risk aversion could come in and lead to a stronger dollar which could exert further pressure on crude oil prices. Outlook The US is expected to announce economic data on non-farm employment, unemployment rate, average hourly earnings and factory orders today. Unemployment rate is at a 26-year high and if the data comes in at 10.2%, then markets could react to this negatively. Risk aversion could rise in financial markets today and lead to selling pressure in Gold, Copper and Crude oil. The rise in gold prices has been phenomenal and the yellow metal is due for a correction. Copper prices may find it difficult to sustain above $7000 levels on the LME.

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