Gold prices are likely to gain in the domestic market on Friday after the dollar firmed up against a basket of currencies in early Asian trade. However, gains could be capped with gold struggling to breach past the $ 1,700 an ounce mark.
With Japan expected to print more money for supply, the dollar rose even as the euro was unable to sustain Thursday’s gain.
A strong dollar will weaken rupee and this in turn will make imports of commodities such as gold costlier, while rendering exports competitive. Indian imports commodities such as gold, vegetable oils and crude oil to meet its demand.
The US talks to end the fiscal crisis also holds key to gold’s further direction.
In early trade, spot gold slid to $ 1,694.35 an ounce, while gold for delivery in February ruled at $ 1,695.60.
The global grains market is in the grips of bears and it could reflect in the domestic market. Lack of export orders dragged wheat and corn (industrial maize) and these in turn pulled down soyabean. Fears of lower exports also had dragged Malaysia crude palm oil on Thursday.
Overnight, soyabean January contracts closed at $ 14.76, while February crude palm oil contracts ended at 2,230 ringgit ($ 730) a tonne.
Wheat for March delivery dipped to $ 8.0850 a bushel and corn for delivery the same month fell to $ 7.2025 a bushel.
Higher stocks in the US hammered crude oil. This could see natural rubber, too, slip since its alternative synthetic rubber, produced from crude oil derivatives, could edge lower.
Brent January crude declined to $ 109.15 a barrel, while NYMEX crude was quoted at $ 86.54.