Gold is likely to be range-bound in the domestic spot and futures market as the yellow metal is caught between a firm dollar and worries over the Euro zone crisis.
While gold tends to drop globally when the dollar rises, the Cyprus bailout deal has given rise to fears that it could become a precedent for solving banking crises in the zone. This is forcing investors to look at the precious metal as a safe bet.
A strong dollar against the rupee, however, will boost gold in the domestic market since it makes imports of commodities such as gold, crude oil and vegetable oils costlier.
In early Asian trade, gold was quoted steady at $1,605.97 an ounce, while gold futures for delivery in June ruled at $1,606.10
Meanwhile, Bloomberg reported that exchange-traded product holdings of gold were set for a decline with holdings down to 2,451.01 tonnes.
In the domestic market on Tuesday, gold for jewellery (99.5 per cent purity) was up a tad at Rs 29,540 for 10 gm, while pure gold (99.9 per cent purity) ended at Rs 29,675.
The rupee ended lower against the dollar that was in demand from oil firms.
Brent oil is likely to rule firm as US refineries have boosted their operating rates to a two-month high. Brent May contract rose to $109.88 a barrel, while NYMEX crude for the same month was up at $96.72 a barrel.
The oils and oilseeds complex could come under pressure on speculation that US growers may go in for soyabean in a big way since insurance payout could be fixed higher for it.
Soyabean, crude palm oil
On the Chicago Board of Trade (CBOT), soyabean for delivery in May fell to $14.47 a bushel, while crude palm oil for June delivery on the Bursa Malaysia Derivatives Exchange slipped to 2,426 ringgit ($783.59) a tonne in early trade.
The grains complex could see a mixed trend with wheat gaining on talk that US farmers may cut its acreage besides damage to the crop in the areas of Kansas in the US.
Corn (industrial maize), on the other hand, could slip as US farmers could raise acreage to an eight-decade high. However, supply squeeze in corn could cap any sharp fall.
On CBOT, wheat for May contracts were up at $7.40 a bushel, while corn contracts for the same month quoted at $7.33.
Natural rubber could drop on fears over Euro crisis, though Chinese demand could hold the complex a bit.