In less than 24 hours, the gold market has undergone a change that prices in the domestic spot and futures market are set to come under pressure on Friday. The transformation has been such that the precious metal could end up giving up all that it gained this week.
During this period, equities around the world have gained, attracting investors to stock markets.
Overnight, data from the US showed that its GDP grew 3.2 per cent during October-December in line with general expectations. Chinese buying, too, seems to have slowed in view of New Year holidays.
The lone bright spot for the precious metal is a marginal rise in holdings in gold-backed exchange-traded funds. Holdings in SPDR Trust, the world’s biggest gold exchange-traded fund, increased to 793.16 tonnes.
In the domestic market, currency movement could have some influence as a strong dollar against the rupee makes import of gold, crude oil and vegetable oils costlier.
Spot gold, gold futures
By mid-day in Asia, spot gold fell to $1,242.75 an ounce, while gold futures maturing for delivery in April slid to $1,242.50.
On NCDEX, spot gold ended at ₹ 29,800 on Friday. MCX and NCDEX gold futures maturing for delivery in February are likely to head lower towards ₹ 29,500.
Higher crude oil demand
Expansion in developed countries means higher demand for commodities such as crude oil. Besides, the current cold spell in the US is resulting in higher consumption. In all, crude oil prices are set to rule firm.
Brent crude for delivery in March ruled firm at $107.89 a barrel and US crude for the same month at $98.09.
Oils & oilseeds
Lower exports of US soyabean and fear of China switching over to South American beans will put pressure on the oils and oilseeds market on Friday.
Soyabean contracts due for delivery in March ruled at $12.76 a bushel on the Chicago Board of Trade (CBOT). Crude palm oil on the Bursa Malaysia Derivatives Exchange opened higher at 2,563 ringgit or $766 a tonne.
Wheat prices could trade sideways as higher demand for US wheat is being offset by easing worries over the winter crop. Corn (industrial maize), on the other hand, will be buoyed by higher exports from the US.
CBOT wheat for delivery in March ruled at $5.54 a bushel and corn for the same month at $4.33 a bushel.