Gold will likely lose its shine on Wednesday in the domestic market after it dropped in early trade in Asia.

Talks over US Budget that will prevent higher taxes and cuts in spending got entangled in problems, which dragged down the yellow metal.

But from the Indian point of view, the dollar slipped against a basket of currencies on optimism that the crisis over US Budget would be solved.

This means the Indian rupee is likely to gain, making imports of commodities such as gold, crude oil and vegetable oils cheaper. India imports these commodities to meet its growing demand.

In Singapore, spot gold slipped to $1,670.89, while gold futures expiring in February dropped to $1,671.90 an ounce.

In the domestic market on Tuesday, gold for jewellery (99.5 per cent purity) closed higher at Rs 30,645 for 10 gm, while pure gold (99.9 per cent purity) ended up at Rs 30,785.

The oils and oilseeds market will take cues from the currency market in the event of the Chicago Board of Trade being closed for New Year on Tuesday. A rising rupee will see the market ruling easy.

The grains complex could also see prices easing as a stronger rupee will affect the competitiveness of exports of wheat and corn (industrial maize).

The solution to the US crisis, however, could propel Brent crude oil higher. The markets were closed on Tuesday.

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