Bullion bulls take a breather after pushing gold above 1140 Monday. Currently trading at 1131, the Comex gold futures may edge lower later today as USD recovers. However, the pullback should not ruin the buoyant outlook for the yellow metal.

After selling 200 metric tons of gold to the Reserve Bank of India, the IMF announced that it sold another 2 metric tons, out of the rest of its planned gold sales of 403.3 metric tons, to the central bank Mauritius at market price on November 11. While the deal was small compared with the one with the Reserve Bank of India as well as the total amount of IMF's total planned sales, it further indicates that emerging economies are seeking to hold more gold in their reserves.

After rallying strongly Monday, sideways trading is seen in crude oil today. Currently trading at 78.4, the benchmark changes little from yesterday's close as there's not much data supporting further rise, yet, investors are reluctant to leave the market as sentiment remains robust.

Crude oil price broke above the trading range, 65-75, established in July in mid-October and then surged to as high as 82 in a week's time. However, the rally seemed to have lost steam since then. In recent weeks, a new trading range, 75-82, has formed and we believe it will sustain towards the end of the year.

Upward of shift of trading range from 65-75 to 75-82 was driven by strong demand from emerging countries, especially those in Asian region. In China, apparent consumption of crude oil from January to October 2009 rose +4.1% yoy to 318.95M tons. In October alone, refining volume surged +10% to 33.3M tons from the same period last year. Growth in oil imports in other countries, such as South Korea and India, has improved significantly after tumbling in late 2008.

However, strength in emerging market demand failed offset the sluggish demand outlook in advanced economies. This is the reason for crude oil's inability to extend further. In the US, although there are signs for easing crude inventories, oil product stockpiles stay at record highs. Demand for distillate does not seem to have found a bottom yet.

On the data front, UK's CPI rose +0.2% mom, beating market expectation of +0.1% gain, in October. On annual basis, the reading climbed +1.5% from +1.1% in September. This was the first increase in 8 months that inflation level rose and it was driven by fuel cost and air fares. At the latest quarterly Inflation Report (November), the BOE raised forecasts for UK's GDP and CPI outlook. The market anticipated BOE's QE extension (+25B pound) made at November's meeting was the last move in the current easing cycle.