Gold is likely to yo-yo on the domestic spot and futures market as US Senators try to reach an agreement on the country’s debt ceiling and avoid a payment default.
The US Congress has time until October 17 to clinch a deal and avoid the default. It would also help end the Government shutdown that has entered the second week.
Speculation is rife that the debt ceiling could be suspended until February, while the Government could continue working at least until January.
Gold, which swung between $1,275 and $1,260 last night, ruled at $1,275.02 an ounce on the spot in early Asian trading. Gold contracts maturing for delivery in December quoted at $1,273.90.
In the domestic market on Monday, gold for jewellery (99.5 per cent) purity ended higher at Rs 30,395 for 10 gm and pure gold at Rs 30,530. On MCX, gold for delivery in December could test Rs 30,000 levels.
Rupee movement
The rupee’s movement will also come into play as a stronger Indian currency against the dollar will make import of gold, crude oil and vegetable oils cheaper. On Monday, the rupee slipped against the dollar.
Gold holdings in exchange-traded funds continue to drop. Holdings in world’s largest gold exchange-traded fund SPDR Gold trust dropped to 889.13 tonnes.
Brent crude
Crude oil will head south on optimism that talks with Iran over its nuclear programme could see some progress. Hopes are higher mainly on the positive approach of Iranian President Hassan Rouhani.
Brent crude contracts maturing in November slipped to $110.97 a barrel and US crude for delivery the same month to $102.28.
Oils, oilseeds
The oils and oilseeds complex could continue to be firm as forecast of rains in growing areas in the US are likely to delay the soyabean harvest. In India, arrival of the kharif oilseeds crop has been affected by a fresh spell of rains in eastern Madhya Pradesh. Besides, the moisture level in the crop that arrives is high. Forecast of a lower China crop is also likely to boost the complex.
However, slowing Indian imports could limit the gains.
Soyabean, crude palm oil
Chicago Board of Trade soyabean futures maturing in November rose to $12.74 a bushel. On Bursa Malaysia Derivatives Exchange, crude palm oil contracts to be delivered in December opened lower at 2,363 ringgit or $743 a tonne.
Rains in the US and a possibility of the US Environment Agency reviewing its position on ethanol mix in gasoline could boost corn. Besides, wheat’s $2.50 a bushel premium over corn could see feed manufacturers switching over to the latter.
Wheat, corn futures
Wheat, on the other hand, could continue to rule firm on concerns over Argentine crop hit by a dry weather and lower estimates of Australian crop.
CBOT ruled at $4.36 a bushel for delivery in December and wheat contracts maturing during the same period were up at $6.92 a bushel.