Gold is likely to drop on the domestic spot and futures market on Wednesday as the prices are yet to reflect the fall in the global markets in the last two days.
The drop in the dollar against a basket of currencies and the chances of rupee rebounding are also likely to drag the yellow metal prices.
And signs that investors are booking profits are evident from the holdings in world’s biggest gold-exchange trade fund, SPDR Trust, dropping to 914.12 tonnes from over 915 at the beginning of the week.
Indian Finance Ministry officials have said that they are thinking of leasing out 200 tonnes of gold that the RBI had bought in 2009. This is set to lift the rupee psychologically, while also ensuring increase in gold supply in the market.
Speculation over the minutes of the US Federal Reserve meeting could still keep the bulls interested. However, any rally may be short-lived since every rise is set to be met with profit-booking.
Spot gold, gold futures
In early Asian trade, spot gold in Singapore ruled at $1,372.55 an ounce and gold futures maturing in December at $1,372.
In the domestic market, gold for jewellery (99.5 per cent purity) ended at Rs 31,365 for10 gm and pure gold (99.9 per cent purity) at Rs 31,520. On MCX, gold October contracts could drop to the levels of Rs 31,100.
The currency market could also hold key since any rise in the rupee against the dollar will make imports of gold, crude oil and vegetable oils cheaper.
Brent crude
Brent crude is set to rule in ranges as the market is caught between declining US supplies and some sanity returning in crisis-ridden Egypt. Speculation of the US Fed pruning the $85-billion-a-month stimulus package could also have a say.
In early trade, Brent crude contracts maturing in October fell to $109.75 and West Texas Intermediate for the same month at $104.90 a barrel
Prospects of better production and beneficial weather forecasts are likely to pound the oils and oilseeds complex. The expected recovery in the rupee could also aid the downtrend.
In the US, survey by Professional Farmers of America Crop Tour showed that the pod counts in the soyabean plant were higher than the five-year average.
Soyabean, crude palm oil
Chicago Board of Trade soyabean futures maturing in November fell to $12.88 a bushel in early trade. Crude palm oil futures maturing in November were up at the opening at 2,332 ringgit or $710 a tonne.
The grains complex are also set to be crushed as field survey in major US growing areas showed chances of a record harvest in corn (industrial maize). In places such as Dakota and Ohio, the crop yield may double compared with last year.
CBOT corn December contracts dropped to $4.74 a bushel.
Wheat is also set to follow corn in sympathy. CBOT wheat futures to be delivered in December slipped to $6.46 a bushel.