Despite the dollar dropping to a three-week low against the Euro, gold could make some headway in the domestic market on Friday. This is mainly in view of central banks buying more gold and stocks in emerging markets rising.
Though dollar has been falling against a major basket of currencies, it is rising against the rupee since foreign institutional investors are booking profits on their investments in India. This is leading to demand for the greenback.
Any drop in the rupee will make import of gold costlier. India imports almost its entire demand for gold.
In early Asia trade, spot gold pared its gains after rising to $1,732.87 an ounce overnight. It traded at $1,729 at 7 am IST. Gold futures for delivery in December were quoted at $1,729.50.
In the domestic market on Thursday, gold for jewellery (99.5% purity) closed higher at Rs 31,910 for 10 gms, while pure gold (99.9 purity) was at Rs 32,050.
The rise in dollar and acute shortage of groundnuts in key growing markets could see oils and oilseeds market gain. However, the news that Argentina has potential for a second soyabean crop and crude palm oil slipping on Bursa Malaysia Derivatives Exchange could check the gains.
The US markets were closed overnight for Thanksgiving holiday, while crude palm oil on Thursday closed lower 2,411 ringgit ($788) a tonne.
Crude oil could cool following the truce between Israel and Hamas in the Gaza dispute.
Crude for delivery in January traded lower at $87.10 a barrel in early trade at Singapore, while Brent crude futures for January settlement dipped to $110.55 a barrel.
This is likely to drag natural rubber prices in the domestic spot and futures market.