Indications of a broad-based improvement in economic activity, albeit tentative, have helped boost business confidence and currently, there is widespread optimism about improved prospects in the coming months, as evidenced by inflow of positive data.

Importantly, tapering of QE in the US is seen closeby with the FOMC minutes signalling that a seven per cent jobless rate was supportive of an end to QE.

Of course, if the August jobs report stays positive, it will further strengthen the will to begin tapering in September.

Global commodity markets have taken cognisance of the positive growth signals. There has been a broad-based price appreciation in commodities in recent days.

So, have commodity markets given a vote of confidence for global growth?

Not really, as analysts are quick to point out, the recent price performance was driven more by supply side issues.

For instance, the uptrend in crude oil is attributed to escalating geopolitical tensions rather than to any change in the market fundamentals. Signals from China are encouraging though.

For instance, the August flash PMI suggests restocking may push Q3 growth higher than in Q2, said an expert.

However, a more sustained flow of positive macro data is necessary for further confirmation of the sentiment. At the same time, gold rallied strongly on Friday post-fix, moving closer toward the psychological $1,400 an ounce.

This is attributed to a weak US housing data which cast some doubt about a decisive action by Fed on tapering anytime soon.

Prospects of improvement in physcial demand driven by seasonal factors aided the sentiment.

The dollar has stayed relatively weak vis-a-vis the euro, although in the medium-term, the greenback is seen holding good prospects of gaining in value.

So, Fed decision and macro data are going to impact commodity markets in the course in the next few weeks in addition of course to dollar strength. In London on Friday, gold edged up to a PM Fix of $1,378/oz, while silver stayed unchanged at $23.06/oz.

Platinum closed at $1,538/oz maintaining its 10 per cent premium over gold, while palladium was at $752/oz.

The physical market for the yellow metal has been less supportive last three months; but with seasonal demand conditions set to return, there is optimism of further support.

Indian regulatory changes, hike in customs duty on import and rapid depreciation of the rupee have combined to thwart the market. But rise in physical prices may once again fan a buying spree.

However, into the last quarter of this calendar year, gold risks a downward correction in dollar terms because of a combination of liquidity reduction through Fed tapering, strengthening dollar and improving equity markets.

However, if Fed tapering decision is delayed for any reason, upside risks will return.

For platinum, the price risk remains skewed to the upside.

In base metals, Chinese demand has recovered partly due to restocking; so, prices have the potential for a further escalation in the short-term.

However, analysts warn that it could run out of steam because growth in the coming months could still be somewhat weaker than usual.

On Friday, LME cash copper closed at $7,333 a tonne and aluminium at $1,847/t. There is belief, copper price could correct down towards the year-end by 8-10 per cent from the current levels. So, selling at every rise in price is favoured.

Iron exports from India, often controversial, have generated renewed heat with the proposal to reduce the export tax to 20 per cent from the existing 30 per cent ad valorem.

However, domestic user industries have opposed the move. The view that a sharp depreciation of the rupee has already improved the export competitiveness of Indian iron ore exports and brought windfall gains for exporters cannot be ignored.

The States of Goa and Karnataka have faced production shutdowns.

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