Strong indicators that the US economy is recovering and bets that the US Federal Reserve could begin cutting its stimulus programme could keep gold prices flat in the domestic spot and futures market on Friday.
Data from the US showed that jobless claims dropped last week, while its factory output showed a growth that was the best in eight months. This has added fuel to the fire ignited by the release of October 29-30 US Federal Reserve’s meet minutes, putting further pressure on gold.
Speculations are that the US Fed could decide tapering its $85-billion-a-month stimulus programme from as early as December.
German GDP data due later in the day should give further indications of the direction the economy is headed.
There was further bearish news for the yellow metal as gold holdings in exchange-traded funds dropped further. SPDR Trust, the world’s biggest gold exchange-traded fund, said that gold holdings slipped to 856.71 tonnes.
Rupee Vs dollar
In the Indian context, any fall in the rupee could cushion gold’s fall since a weaker Indian currency against the dollar will make import of gold, crude oil and vegetable oils costlier. The other problem in India is the lack of supplies, particularly with the Government tightening imports to keep the current account deficit under control.
By mid-day in Asia, spot gold was quoted at $1,245.50 an ounce and gold contracts maturing for delivery in December at $1,244.60.
Spot gold, gold futures
In the domestic market on Thursday, gold for jewellery (99.5 per cent purity) slipped to Rs 30,830 for 10 gm and pure gold (99.9 per cent purity) to Rs 30,980.
Demand for raw materials
Signs of economic revival mean better demand for raw materials such as crude oil. It should push up crude oil prices. Expect crude oil prices on the domestic futures exchange to gain.
In the global market, Brent crude was up at 109.96 a barrel and US crude at $95.23.
Malaysian palm oil stocks
RBD palmolein, soyabean and refined soyabean oil in the domestic futures could gain further with the global market reacting to views from Malaysia that palm oil stocks could drop 30 per cent this year.
Indonesia may hold higher stocks but is being counted out because of its plans to increase palm oil use in bio-fuel.
On Chicago Board of Trade, soyabean for delivery in January was up at $12.94 a bushel. Crude palm oil contracts maturing in February on Bursa Malaysia Derivatives Exchange opened higher at 2,671 ringgit or $833 a tonne.
Wheat, corn futures
Re-emergence of demand from Brazil and a couple of other countries is likely to help wheat gain on NCDEX. Industrial maize (corn) could also head north as ethanol prices in the US rise and farmers are seen holding back their produce in view of low prices.
CBOT wheat for delivery in March was up at $6.56 a bushel and corn to be delivered the same month at $6.56 a bushel.