Gold prices are likely to trade sideways in the domestic spot and futures market as US President Barack Obama and the Congress slug it out on passing the Budget.
Obama has said that the shutdown is avoidable and blamed the Republicans for trying to fight again the elections they lost to him last year.
At the centre of the controversy is the demand by the Congressmen to cut allocation for the healthcare programme, something that is very close to Obama’s heart.
However, the market hopes that any shutdown will only be for a few days.
When reports last came in, US President Barack Obama and the Congress were still negotiating, failing which the Government could shutdown today.
Partial shutdown
Gold gave up its gains last night as the market was of the view that the shutdown, which looks imminent, may not last long.
In the Indian context, any rise in the rupee against the dollar will make import of gold, crude oil and vegetable oils cheaper.
Spot gold, gold futures
In early Asian trade, spot gold ruled at $1,328.60 an ounce and gold futures maturing in December at $1,328.80.
In the Mumbai bullion market on Monday, gold for jewellery (99.5 per cent purity) slipped to Rs 30,225 for10 gm and pure gold (99.9 per cent purity) to Rs 30, 375.
On MCX, gold October contracts could go below Rs 30,500.
Crude oil to remain range-bound
The stalemate over the US Budget will also see crude oil range-bound. The deadlock is seen affecting the demand for crude in the US, world’s biggest consumer.
Brent crude November contracts ruled at $108.01 a barrel and West Texas Intermediate crude contracts for the same month at $101.97.
The oils and oilseeds complex are set to slide after the US Department of Agriculture said inventories were higher at over 140 million bushels against the earlier estimate of 125 million bushels made in September.
Projections for yield have also been raised, leading to the complex turning bearish.
Crude palm oil, soyabean
Chicago Board of Trade soyabean contracts, to be delivered in November, fell to $12.76 a bushel. On Bursa Malaysia Derivatives Exchange, crude palm oil for delivery in December slipped to 2,294 ringgit or $705.5 a tonne.
Corn (industrial maize) prices could drop but wheat prices may search for direction on mixed USDA report.
Corn, wheat prices
The USDA said that corn stocks could be 823.6 million bushels, much higher than the market estimates of 681 million bushel. Prices immediately fell to a three-year low. In Asia, CBOT corn was quoted at $4.42 a bushel.
Though wheat harvest is seen higher, the USDA put the stocks at 1.85 billion bushels against market estimates of 1.913 bushel. Stocks disappearance since June were seen 10 per cent higher compared with the same period a year ago.
CBOT wheat ruled unchanged at $6.78 a bushel.
The over $2 a premium over corn could prevent wheat from making further gains.