Gold is likely to be influenced by currency movements on Thursday as the global market awaits the outcome of a key European Central Bank meeting. The bank meeting will be decisive to temper the euro since the bank President Mario Draghi feels that the currency has increased too sharp and too fast.
Euro is the key to gold’s movement and its fall could drag the yellow metal lower. The rupee’s tendency to rise in the last few sessions will also aid a downtrend. This is because a stronger rupee against the dollar will make imports of commodities such as gold, crude oil and vegetable oil cheaper. It, however, will make exports uncompetitive.
Still, it pays to bet on the platinum group metals now as platinum and palladium ruled at 17-month high on the back of supply shortage fears.
In early trade at Singapore, gold ruled at $1,678 an ounce, while gold futures for delivery in March quoted at $1,679. In the domestic market on Wednesday, gold for jewellery (99.5 purity) slipped to Rs 30,290 for 10 gm and pure gold (99.9 purity) dropped to Rs 30,410.
The oils and oilseeds complex could come under pressure after soyabean dropped on the Chicago Board of Trade (CBOT) overnight on rain in South America. The rain has boosted hopes of a better crop and ended supply fears.
On CBOT, soyabean March contracts dropped to $14.78, while on Bursa Malayasia Derivatives Exchange crude palm oil April contracts slid to 2,547 ringgit ($822) a tonne.
Rain in growing area of the US is likely to keep wheat and corn (industrial maize) on leash. The rupee’s rise will add to the complex’s woes. Overnight on CBOT, corn March contracts dropped to $7.20 a bushel and wheat contracts for the same month quoted at $7.60 a bushel.
Crude oil will likely gain in drop in inventories. This will also help natural rubber gain as its alternative synthetic rubber derived from crude oil will rise.
Brent crude March futures rose to $116.73 a barrel, while NYMEX crude March futures were up at $96.86 a barrel.