Gold is likely to gain despite a solution eluding the crisis over US Budget talks. The market awaits a weekend meeting for an end to the crisis that threatens to throw the US economy out of gear. The domestic market could see some shine given the bearish trend seen in the last couple of sessions. The gains in the global market will also improve the market sentiment besides growing consumer interest in the yellow metal.
A solution to the US crisis could propel gold higher as lower interest rates will see investor plumping for gold that is likely to give better returns. However, the dollar’s fall against the Euro does not augur good for the yellow metal in the domestic market. Thus, gold could be under pressure, though lacking in direction.
A fall in the dollar will make imports of commodities such as gold, crude oil and vegetable oil cheaper. On the other hand, it will make exports competitive.
In early trade at Singapore, spot gold eased to $1,662.79 an ounce, while gold futures expiring in February quoted at $1,663.70 an ounce.
In the domestic market, gold for jewellery (99.5% purity) ended down at Rs 30,405 for 10 gm, while pure gold (99.9% purity) slid to Rs 30,565.
The oils and oilseeds market could see some cool off after continuous gains in the last couple of sessions. Besides, a strong rupee will cast its shadow on trading.
Overnight on the Chicago Board of Trade, soyabean for delivery in January declined to $14.18 a bushel, while on Bursa Malaysia Derivatives Exchange, crude palm oil March contracts ended higher at 2,469 ringgit ($805) a tonne.
The easing rupee is likely to see grains gain, besides the MMTC floating a tender to export 50,000 tonnes. A higher support price for wheat will also aid the trend, including in maize (corn).
On the CBOT, wheat for delivery in March fell to $7.72 a bushel and corn for delivery the same month was down at $6.92 a bushel.
Crude oil is seen stable with the market looking for direction from the US talks to solve the Budget crisis. That could see natural rubber also stable since its alternative synthetic rubber, derived from crude oil, is seen unchanged.
Brent crude in early trade quoted at $110.97 a barrel and NYMEX crude at $91.26.