The sparkle in gold seen during last weekend and at the beginning of this week seems to be a flash in the pan. The yellow metal’s prices are under pressure again.
Bets that the US Federal Reserve could trim the stimulus package further from the already pruned $75 billion a month are now dragging the market.
The US Fed, which pumps money into the market to buy bonds and other assets to keep the economy going, is expected to take a decision on how to go about the stimulus programme during its open market committee meeting during January 28-29.
A slew of data expected from Europe and US are likely to be a guiding factor for the US Fed. On Thursday, factory production data is expected from Europe, Germany and the US.
The US will also come out with jobless claims, retail sales data and home sales figures. Broadly, these could give a sense of where the economy is headed.
Gold is also increasing under pressure from a rising dollar and a rally in the equities market. Low inflation means investors are attracted to equities and other alternative assets other than gold.
Investors’ losing interest can be well gauged from gold-backed exchange-traded funds reporting drop in holdings again. SPDR Trust, world’s biggest gold-backed exchange traded fund, reported that its gold holdings dropped to 795.85 tonnes after the holdings showed one of the biggest gains in two years during the weekend.
In the domestic market, currency movements could have some effect as a weaker rupee against the dollar makes imports of gold, crude oil and vegetable oils costlier.
Spot gold, gold futures
In Asia, spot gold opened lower at $1,234.28 an ounce. Gold futures maturing for delivery in February were down at $1,233.90.
On NCDEX, spot gold ended lower on Wednesday at Rs 29,560 for 10 gm.
Gold February contracts on MCX and NCDEX could drop below Rs 29,200.
Crude oil complex
The International Energy body projecting a higher demand on economic growth rebounding in developed countries and lower US distillate stocks are set to propel crude oil prices higher.
Brent crude, in early trade, quoted at $108.05 a barrel and US crude at $96.55.
Oils and oilseeds
The oils and oilseeds market will be range-bound as weather concerns over the Argentine crop seem to be easing. Better demand for soyameal is expected to provide some cushion to the market.
On Chicago Board of Trade, soyabean futures maturing for delivery in March ruled at $12.80 a bushel. Crude palm oil on Bursa Malaysia Derivatives Exchange for delivery in April ended on Wednesday at 2,575 ringgit or $775 a tonne.
Grains complex
Corn (industrial maize) could gain as poultry and dairy prices gain globally but wheat may face pressure on higher production and carryover stocks. Concerns over US winter wheat remain, though.
CBOT corn March futures quoted at $4.26 a bushel and wheat for the same month at $5.62 a bushel.