US Home Sales data was encouraging and today, OECD has given better outlook. We saw reports releases from the U. S., European Union, Japan and India on Tuesday. The housing data from the U. S. was quite encouraging as they continue to show improvement and thereby revived the hopes of an economic recovery. This event supported an upside in prices of industrial metals. Housing sector is one of the most important industries to watch out for in the U. S. as far as the recovery is concerned.

Existing Home sales grew by 2.40 percent for the month of May. Manufacturing Purchasing Managers Index (PMI) report from Euro Zone witnessed a marginal increment whereas Service PMI remained flat. While reports from the U. S. and the Euro Zone induced some optimism, the reports from Japan showed further weakness in their economy as the exports and imports declined by 40.9 percent and 42.9 percent respectively in May and the trade balance increased to 299 billion Yen on the back of proportionately higher fall in imports than the exports.

Another important indicator for the day was from India. In spite of Wholesale Price Index in the negative territory, Consumer Price Index resisted to cool down and was found to be 10.21 percent for May against the figure of 9.09 for April. The reason attributed to it is the rising food prices. Food items have over 50 percent of weightage in CPI whereas it has only around 15 percent weightage in WPI. This development puts the government in a dilemma as to whether infuse more liquidity in the system to boost the growth or to contain the high retail inflation as indicated by CPI. Logically, CPI being the politically sensitive indicator, the government should follow policies intended to contain retail inflation.

Today we have some important reports from the U. S. which may impact the markets significantly. Any further improvement in Durable Goods and Housing reports can trigger an upside in prices of industrial metals which could be further supported by weakness in dollar as the weak dollar makes them cheap to buy. Another very important development for the day is outcome of FOMC policy review meet. It is expected that FOMC will keep the FED fund rate unchanged at 0.25. One should watch the outcome of meeting very closely as any indication of further weakness can induce risk aversion, triggering an upside in bullion.