Gold prices in spot and futures market are likely to head further south on Thursday as investors abroad choose to offload their holdings in exchange-traded funds. In early Asian trade, the precious metal fell below the psychological mark of $1,450 an ounce, cause enough to rekindle fears of a crash.
In general, the commodities market is seeing a selling trend in almost all commodities and gold is no exception.
Gold’s fall is despite the US Fed Reserve’s decision to continue its current monetary policy of pumping money into the economy.
Holdings in SPDR Gold Trust, world's largest exchange-traded fund that holds gold in electronic form have dropped to their lowest since September 2009 to 1,075.23 tonnes.
In Singapore, spot fell to $1,449.82 an ounce, while gold futures maturing in June dropped to $1,449.
In the futures market, gold futures on MCX for delivery in June could drop and test Rs 26,250 for 10 gm, while August contracts may test Rs 26,750.
Gold for jewellery (99.5% purity) had ended at Rs 27,150 for 10 gm on Tuesday, while pure gold (99.9% purity) slid to Rs 27,285.
With data showing that crude stocks in the US are at eight-decade high, crude oil will likely tend to cool.
In early trade, Brent crude June contracts ruled at $99.98 a barrel and West Texas Intermediat (NYMEX) contracts for the same month quoted at $90.92 a barrel.
The oils and oilseeds complex will continue to face pressure on two fronts. One, rumours are agog that US could import soyabean from South America and two, slowdown in China could affect demand for US soyabean.
Lowering of palm oil tax by Indonesia is another bearish factor as Malaysian data, too, added to the trend showing lower exports.
In electronic trade, Chicago Board of Trade (CBOT) soyabeans July contracts declined to $13.73 a bushel, while crude palm oil for July delivery on Bursa Malaysia Derivatives Exchange dipped to 2,293 ringgit ($757) a ton on Wednesday.
Profit-booking is set to take a toll on the grains complex after rallies in wheat and corn (industrial maize) earlier this week.
On CBOT, wheat for delivery in May quoted at $7.22 a bushel and corn contracts for the same month were down at $6.47 a bushel.