Gold could come under pressure in the domestic market on Wednesday as a ceasefire looked imminent over the Israel-Hamas stand-off and stocks gained in Asia after US data showed construction of homes was up at a four-year high last month.
The one factor that could keep gold from falling is the demand for dollar from foreign investors in India who are trying to vacate their positions in the equities market as the year-end approaches.
In early trade in Singapore, spot gold was down marginally at $1,725.89 an ounce after having dropped a bit sharply overnight. Gold futures due for delivery in December were quoted at $1,726.20.
In the domestic market, gold for jewellery (99.5 purity) had ended higher at Rs 31,900 for 10 gm on Tuesday, while pure gold (99.9 purity) advanced to finish at Rs 32,040.
The dollar which also decides the direction of the precious metal was mixed, rising to a seven-month high against the Japanese yen but dropping to a two-week low against the euro. Any rise in the dollar will result in the yellow metal gaining as India depends on imports to meet its demand.
Crude oil
The easing of the Gaza stand-off means that crude oil is likely to come under pressure. Brent oil for February delivery dropped below $110 an ounce in early trade but US data showing drop in stockpiles helped it pare losses. In electronic trade, Brent crude ruled at $109.83, while crude oil for delivery in February quoted at $87.33 a barrel. Brent oil is the benchmark for global crude oil prices.
These developments are likely to reflect in the natural rubber market. The oils and oilseeds market could also be influenced but the dollar’s movement will hold the key along with reports from oilseed growing centres in India.
Edible oil prices
Reports of lower arrivals are already pushing up edible oil prices in the country. US soyabean on the Chicago Board of Trade (CBOT) is undergoing technical correction leading to the counter rebounding back above $14 a bushel. Overnight, soyabeans for January delivery on the CBOT closed higher at $14.12 3/4 a bushel.
On Bursa Malaysia Derivatives Exchange, crude palm oil on Tuesday slid to close 2,457 ringgit ($803) a tonne.
Grains may stay rangebound
Grains are likely to be range-bound, caught between a slipping currency and rising prices in the global market.
On CBOT, corn futures for December delivery increased to $7.43 ¼ a bushel and wheat for delivery the same month was up at $8.45.
FACTORS TO LOOK-OUT FOR
*Demand for dollar from FIIs, thus weakening the rupee
*Settlement to the Gaza standoff