Crude oil's decline stabilized in European morning as the dollar pares previous gains after better-than-expected sentiment data in the Eurozone. To be expired today, the May contract recovers slightly to 45.6 after falling to 1-month low at 45.19 while the actively-traded June contract rebounds to 48.4. However, near-term outlook remains on the downside as the market expects another week of inventory gain in the US

In the Eurozone, ZEW investor confidence improved to 11.8 in April, much better than market expectation of 0 and -6.5 in March. In Germany, the reading surged to 13, the highest and the first positive reading since mid-07, from -3.5 in March. A positive reading is encouraging as it indicates the number of people surveyed who anticipated better economic outlook outweighed the number of people who expected a worse outlook. The dollar index pulls back to 86.5 (Mondays' high: 86.87) today as major currencies including euro and pound reverse grounds.

Stock markets in Europe change little in the morning. In the UK, FTSE 100 Index was mildly down by 0.6% as weakness in banking shares offset gains in retailer Tesco which reported better-than -expected earning results. Benchmark indices in Germany and France are also moving within 1% range so far.

Gold price rebounds for the second day to 890 as stock markets retreat and physical demand increases. According to Bombay Bullion Association Ltd, gold import in India may double to 50 metric tons in 2009 as recent correction in gold price stimulates demand, especially ahead of Akshaya Tritiya festival next week.

Extended period of low interest rate environment is another driver for gold's long term rally. The Bank of Canada will meet later today and the market expects it to announce a 25 bps cut to 2.5%. Additionally, the central bank may also implement quantitative or credit easing measure such as asset purchase so as to revive the economy. Earlier in Asia, the RBA released minutes for April's meeting. Although the central bank slashed interest rate by only 25 bps, policymakers hinted likelihood for further easing. We believe global interest rate environment will remain low for some time and it is positive for gold investment as opportunity cost is lowered.

LME copper extends the 5% decline Monday by sliding 3% more today. The correction is in tandem with the weakness in copper futures in Shanghai Exchange. In fact, we have long been saying that recent rally in copper price has been overextended and is due to a meaningful correction.

Over the past few weeks, the Chinese government has been buying copper aggressively with the aim to increasing its strategic reserve and this was the theme for pushing copper price higher. However, a report showed today that China has started selling copper in local spot market. We believe this triggers today's selloff.