Gold prices in the domestic spot and futures market are likely to climb after a weak dollar lifted prices in the global market overnight.
But the outlook continues to be dim as US jobs data on Thursday showed further recovery in the economy. This will lead to rise in equities and other markets which investors will find attractive to invest in.
However, low volume during the holiday season could tend to keep the yellow metal volatile. Last night’s gain of over $10 an ounce is an example of this trend.
Investors’ interest is evident from further pruning of their holdings in gold-backed exchange traded funds. Gold holdings in SPDR Trust, world’s biggest exchange-trade fund, dropped further to 804.22 tonnes. It shouldn’t be surprising if the holdings drop below 800 tonnes before the year rolls out.
Rupee Vs dollar
A strong rupee could also play its role in dampening the precious metal prices as a strong Indian currency against the dollar makes import of gold, crude oil and vegetable oils cheaper.
Though the bulls could be emboldened a bit by the Government move to ease the import norms for gold dore, refining of the yellow metal has not really caught up in the country to make much of a difference.
Spot gold, gold futures
By mid-day in Asia, spot gold ruled at $1211.07 an ounce and gold futures maturing for delivery in February at $1,210.50.
In the domestic market, NCDEX gold had ended at Rs 29,450 for 10 gm on Thursday evening. Gold futures on MCX and NCDEX for February could top Rs 28,500.
US crude oil stockpiles
Crude oil is likely to rule firm on US data showing higher employment and drop in stockpiles. Brent crude futures maturing for delivery in February ruled at $111.74 a barrel and US crude at $99.44.
The oils and oilseeds market is likely to be cushioned from a steep fall in demand for soyabean from China which is rejecting corn-based animal feed from the US, suspecting presence of unauthorised GM corn.
Favourable weather in South America for the soyabean crop and lower palm oil exports during December 1-25 are main dampeners.
Crude palm oil, soyabean
Chicago Board of Trade soyabean for delivery in March fell to $13.08 a bushel. Crude palm oil March contracts on Bursa Malaysia Derivatives Exchange opened lower at 2,633 ringgit or $799 a tonne.
Wheat and corn (industrial maize) are likely to look up on short-covering. CBOT wheat March contracts were up at $6.08 a bushel and corn for the same month at $4.27 a bushel.