J Dataflow continued to weigh on the dollar, pushing other major currencies higher, yesterday. With the exception of the US energy sector, commodities were buoyed by a weaker dollar.
Comex gold for December delivery soared to as high as 1298 before settling at 1292.1. . Silver has touched a fresh peak of $21.23 overnight with the metal still on course to reach our target of $21.45 as the metal benefit from improving economic indicators and as a cheaper alternative to gold, which targets $1300.
In the base metal complex, copper surged to a 5-month high trading above ` 360 at MCX and $7900 at LME amid dollar weakness.
However, the prospect of further devaluing kept the dollar on the defensive, closing down 1% against the euro and 0.75% versus the yen. The combination of a weaker dollar and gradually improving economic indicators will continue to provide background support; however there are question marks surround the sustainability of gains in some of the metals due to less favorable fundamentals.
The real challenge will be for copper to surpass the $8043 high from mid-April, failure could trigger another deep correction
US oil prices erased gains made earlier in the day as oil inventories unexpectedly increased despite shutdown of the Enbridge pipeline during the week.
