Gold prices on the domestic spot and futures market are likely to rule firm due to short-covering in the global market and a weak Indian rupee.
Spot prices could test Rs 32,500 for 10 gm. On MCX, October contract should easily scale the Rs 31,000-mark.
A week-end industry meeting at Jaipur attributed last week’s rise in gold prices to short-covering rather than for any fundamental reason. Prices are seen under pressure once the dollar begins to ascend.
There are, however, two factors that are seen helping gold hold on to its gains.
Gold holdings
One, after almost a year gold holdings in exchange trade funds have increased. SPDR Trust, the world’s largest gold-exchange traded fund, reported that holdings increased by over four tonnes to 915.32 tonnes.
Also, hedge funds increased their bets last week on gold gaining further.
Spot gold, gold futures
In early Asian trade at Singapore, spot gold was up at $1,381.44 an ounce and gold futures maturing in December at $1,380.80.
The rupee’s movement will also hold key as any further weakening will make import of commodities such as gold, crude oil and vegetable oils costlier.
Crude oil
Crude oil is set to head higher on fears that unrest in Egypt could lead to disruption of West Asian crude.
The Egyptian Army has, however, ruled out allowing anti-Government elements having their way. The unrest is one of the reasons why Brent crude’s premium over West Texas Intermediate (WTI) has increased.
Brent crude for delivery in October quoted at $110.45 a barrel and WTI for the same month at $107.40.
The oilseeds and oils complex could see some heat generating on concerns that the soyabean crop in key US growing area could be affected by dry weather.
However, a couple of forecasts say that rain is likely during the week=end. For the domestic market, the uppermost issue will be how the rupee fares against the dollar.
Soyabean, crude palm oil
Chicago Board of Trade (soyabean) contracts maturing in November gained in early Asian trade at $12.85 a bushel. Crude palm oil November contracts on Bursa Malaysia Derivatives Exchange opened higher at 2,332 ringgit or $712 a tonne.
The grains complex could also see some rise in line with soyabean. Fears over weather also could hold prices of grains but the outlook is still bearish.
CBOT corn (industrial maize) contracts maturing in December rose to $4.73 a bushel in early Asian trade, while wheat futures up for delivery in December ruled at $6.52 a bushel.