Gold is likely to dip in the domestic market but a rising dollar could cap sharp falls or even swing the trade’s direction a different way.
The dollar rose against the Japanese yen in early Asian forex trade, while Gold dropped in Singapore. Uncertainty over the US fiscal crisis is keeping the dollar firm.
In Singapore, spot fell to $1,651.62 an ounce before rising to $1,654.45. Gold February contracts were quoted at $1,652.70.
Gold ended lower on Monday in the domestic market with the yellow metal meant for jewellery (99.5% purity) closing at Rs 30,600 for 10 gm and pure Gold (99.9% purity) ending at Rs 30,730.
A rising dollar will make imports of commodities such as Gold, edible oil and crude oil costlier and hence, it is seen capping fall in Gold.
The oils and oilseeds market is seen gaining as China is expected to enter the market again after cancelling close to 9 lakh tonnes of soyabean import deal. The domestic market is facing problem of supply with kharif harvest coming to an end.
Soyabean on the Chicago Board of Trade for delivery in January closed higher at $14.39 a bushel, while Malaysia palm oil for delivery in March ended at 2,428 ringgit ($792) a tonne.
The grains complex is likely to gain as cold wave sweeps key growing regions around the Black Sea and Europe. A strong dollar could, however, temper the rise.
On CBOT, wheat for March delivery ended at $7.9375 a bushel on Monday, while corn for delivery the same month was up $7.0425 a bushel.
Crude oil is likely to rule higher on optimism of US budget talks. A solution could push demand. In early Asian trade, Brent crude was up at $109.30 a barrel, while NYMEX crude increased to $89.07.
This could see natural rubber rising since its alternative synthetic rubber, derived from crude oil, will rule firm.