Gold is likely to gain in the domestic spot and futures market as investors weighed the withdrawal of one of the contenders for the US Federal Reserve Chairman’s post positively.
Lawrence Summers, who along with Janet Yellen, was seen as top replacement at the US Fed Reserve when Ben Bernanke’s term ends, withdrew from being considered for the top job. Summers was seen as a person who would tighten the Fed monetary policy more than Yellen. Still, the US Fed could cut its monthly $85 a billion bond buying programme to boost the economy by $10 billion.
The other factor that could push gold up is the dollar’s fall against a basket of currencies. However, in the Indian context a weak dollar against the rupee makes imports of gold, crude oil and vegetable oils cheaper. This will cap the yellow metal’s rise in the domestic market.
A clear picture on the US Fed’s move will emerge mid-week at the FOMC meeting. On the other hand, bets that gold will be bearish increased for the first time in five weeks. Gold holdings in world’s biggest exchange-traded fund, SPDR Trust, dropped to 911.12 tonnes.
US industrial output data, due later tonight, could also give an insight into the economic recovery.
Spot gold, gold futures
In early Asian trade, spot gold rose to $1,330.60 an ounce and gold futures maturing in December to $1,330.20.
In the domestic market on Saturday, gold for jewellery (99.5% purity) rose to 30,150 for 10 gm and pure gld (99.9% purity) to Rs 30,300.
On MCX, gold October contracts will regain the Rs 30,000 levels and could even touch Rs 30,100.
Crude Oil
Crude oil will continue to be under pressure after the US and Russia agreed on Saturday to a plan to eliminate chemical weapons in Syria. This has eased concerns over supplies from West Asia.
Brent crude contracts maturing in November fell to $110.83 a barrel and West Texas Intermediate crude to be delivered in October to $107.39.
Oils and Oilseeds complex
The oils and oilseeds complex will likely head south as rains in US Midwest could help the soyabean crop that has been suffering from hot, dry weather.
The approach of the peak palm production season and arrival of Indian kharif oilseeds are other bearish factors.
Chicago Board of Trade soyabean contracts maturing in November dropped to $13.65 a bushel. On Bursa Malaysia Derivatives Exchange, crude palm oil for delivery in December was up at 2,344 ringgit or $713 a tonne.
Grains stockpiles
Prices of corn (industrial maize) and wheat are also set to drop on forecasts of higher crop and a supply glut across the globe.
CBOT December corn contracts fell to $4.55 a bushel and wheat contracts for the same month to $6.40 a bushel.