Gold prices in the domestic spot and futures market are likely to continue to rule firm as investors and traders look to the US Federal Reserve’s two-day meet beginning today.

Fed stimulus

The Fed is expected to continue its stimulus programme of pumping $85 billion every month to keep the economy moving.

The decision could be taken as the US economy is believed to have been affected by the shutdown caused by the standoff between its President Barack Obama and lawmakers.

A couple of data released by the US last night showed the economy sagging. Factory output in September was lower than forecast and sales of pre-owned homes slipped to a three-month low.

Festive season demand

In India, gold could be in demand in view of upcoming Dhanteras and Diwali, though the usual enthusiasm for buying is reportedly missing. Jewellers are trying to woo buyers with various schemes or offers or discounts.

Rains in various parts of the country are also affecting demand as arrivals of the summer or kharif crop have been delayed. There is also fear that some key crops such as soyabean could have taken a hit due to excess rain.

Other bearish factors

Other bearish factors are funds raising their bearish bets on gold and investors cashing out of gold-exchange traded funds. Gold holdings in SPDR Trust, the world’s biggest exchange-traded fund, were unchanged at 872.02 tonnes on Tuesday morning.

By mid-day in Asia, spot gold rose to $1,356.94 an ounce and gold futures expiring in December at $1,356.80.

In the domestic market on Monday, gold for jewellery (99.5 per cent purity) ended at Rs 31,905 for 10 gm and pure gold (99.9 per cent purity) to Rs 32,095.

On MCX, gold contracts maturing in December could try to top Rs 31,000.

Crude oil may fall

Crude oil prices could drop as US data due later tonight could show that stockpiles could have increased to the levels seen in June.

Brent crude for delivery in December dropped to $109.12 a barrel and US crude to $98.40.

Higher soyabean acreage

The oils and oilseeds complex could come under pressure on favourable weather in South America. Reports showed that soyabean sowing in key Brazilian area was up by eight percentage points compared with the same period a year ago. Rains in Argentina have, on the other hand, improved the prospects of the oilseed there.

The fall could, however, be cushioned by the export orders for US soyabean with China buying 1.15 lakh tonnes and a similar volume heading to an unknown destination.

Chicago Board of Trade soyabean contracts maturing in January ruled at $12.70 a bushel. Crude palm oil for delivery in January on the Bursa Malaysia Derivatives Exchange rose a tad to 2,464 ringgit or $783.50 a tonne.

Bears in action

The grains complex could see bears in action with increase in sowing of wheat crop in Ukraine and Russia and improved weather in South America dragging wheat. The cereal is also seen as over-bought, leading to profit-booking. Prospects of higher production will put pressure on corn (industrial maize).

CBOT wheat contracts to be delivered in December ruled at $6.82 a bushel and corn contracts for the same month at $4.30 a bushel.

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