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Gold prices on the domestic spot and futures market are likely to drop on Monday as fears of immediate US attack on Syria have receded.
Speculation that the US Federal Reserve will unwind its $85-billion-a-month stimulus programme will put further pressure on the yellow metal.
US President Barack Obama will turn to the Congress to take military action against Syria and speculation is that it will be delayed.
China's factory ouput
Data from China showing recovery in factory output after slowdown in the last two quarters could also dampen the precious metal.
A 77 per cent plunge in demand for US gold coins and a five per cent rise in Australia’s gold production are other bearish signals for gold.
Gold exchange-traded funds
The bright spots, however, are holdings in gold exchange-trade funds rising to 920.03 tonnes and hedge funds boosting their bullish bets on gold to 97,901 futures and options. Bearish bets have tumbled by 37 per cent for data available up to August 27.
In the context of the domestic market, the rupee’s movement against the dollar will also be crucial since any decline in the Indian currency against the greenback makes import of commodities such as gold, crude oil and vegetable oils costly.
Spot gold, gold futures
In early trade in Asia, spot gold zig-zagged to quote at $1,389.23 an ounce after having dropped to as low at $1,373.38. Gold futures maturing in December slipped to $1,389.
In the domestic market on Saturday, gold for jewellery (99.5 per cent purity) rose to Rs 31,950 for 10 gm and pure gold (99.9 per cent purity) to Rs 32,120. On MCX, gold for October contract could turn bearish.
Crude oil
Crude oil could head lower on easing geo-political tensions in West Asia as concerns over US attack on Syria ease.
Brent crude for delivery in October fell to $112.92 a barrel and West Texas Intermediate crude for the same month to $106.03
The oils and oilseeds complex could head lower as fears over weather-related issues in the growing areas of the US recede. A bit of profit-booking is also dragging the counter.
Soyabean, crude palm oil
In early Asian trade, soyabean on Chicago Board of Trade (CBOT) dropped to $13.57 a bushel for futures maturing in November. Crude palm oil futures maturing in November opened higher on Bursa Malaysia Derviatives exchange at 2,436 ringgit or $738.52 a tonne.
Weather concerns, however, continue to pressure the grains complex. Corn (industrial maize) production in the US is seen lower than initial estimates.
CBOT corn for delivery in December rose marginally to $4.82 a bushel and wheat contracts for the same month dropped a tad to $6.54.
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