Gold is likely to rule range-bound with the yellow metal looking up in early Asian trade as the deadline to solve the US fiscal crisis nears. The dollar dropped against a basket of currencies and these factors are likely to weigh on the precious metal.

However, the rupee could have a final say as the Indian currency is expected to remain volatile in the next few months. The rupee could particularly be under pressure on demand from oil importers and foreign investors, looking to lock-in their profits.

For India, the dollar’s movement is crucial as it imports gold to meet its demand, while brings in a huge volume of edible oils and crude oil to overcome the demand-supply gap.

The dollar pared its losses marginally against a basket of currencies in Asian currency market.

But since Tuesday when gold ruled around $ 1,750 an ounce, the yellow metal has dropped over one per cent, raising the possibility of a range-bound trading.

Early on Thursday in Singapore, spot gold was up at $ 1,721.51 an ounce, while gold futures for December delivery rose to $1,721.50.

In the domestic market, gold for jewellery (99.5 purity) dropped on Wednesday to Rs 32,325 for 10 gm, while pure gold (99.9 purity) slipped to Rs 32,465.

The bearish global oils and oilseeds market is likely to put pressure on the domestic market, despite indigenous oils gaining on supply shortage. Palm oil stocks are seen at a record high and a drop in the dollar will mean import costs will ease. The rally seen in the last few sessions could also force speculators to book profit.

On the Chicago Board of Trade (CBOT), soyabean for delivery in January was up marginally at $14.46-3/4 a bushel. On Bursa Malaysia Derivatives Exchange, crude palm oil for delivery in February dropped to 2,394 ringgit ($784) a tonne on Wednesday.

Grains are likely to see wheat gain on rising demand in the global market in view of a low crop in key countries such as the US, Argentina and Ukraine. Corn (industrial maize) is also likely to benefit as a result.

Wheat for December delivery on CBOT increased to $8.78 a bushel, while corn for delivery the same month was up at $7.61 a bushel.

Concerns over a solution to the US fiscal deficit is pinning down crude oil. In early trade, Brent oil was down at $109.51 a barrel for delivery in January. NYMEX January crude contract were down at $86.49.

This could see natural rubber under pressure as prices of synethetics derived from crude are likely to drop.

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