Gold prices on domestic spot and futures market are set to rule firm on Tuesday, following the yellow metal’s run to a four-month high in the global market.
Gold is seen gaining strengthen on concerns over growth in China which is seen faltering and the unrest in Ukraine, which could default on its payment. Oleksander Turchinov, Ukraine’s acting President, has sought global help to overcome the financial crisis after the country angered Russia by staging a coup to oust Viktor Yanukovych.
Investors, too, have joined the rally that, however seems short-term. Holdings in SPDR Trust, world’s biggest gold-backed exchange-traded fund, are back above 800 tonnes at 801.61 tonnes.
Signs of profit-booking have begun to emerge in early Asian trading as spot gold in Singapore dropped to $1,333 an ounce and gold futures maturing for delivery in April at $1,333.60.
In India, currency movements will have an additional impact as any weakening of the rupee against the dollar will make imports of gold, crude oil and vegetable oils costlier.
Spot market
In the spot market, pure gold (99.9% purity) ended higher at Rs 30,670 for 10 gm in Mumbai on Monday.
Gold futures on MCX and NCDEX for delivery in April are likely to test Rs 30,000.
More cues from US data
More cues for gold should be available later in the day when the US releases its home price index and consumer confidence.
With US stockpiles at Cushing feared to drop this week when the data is released, crude oil prices are set to rise. In addition, continuing cold weather in the US will result in higher demand.
Brent crude for delivery in April was up at $110.50 a barrel and US crude at $102.47.
Higher bean exports from the US, dry weather in Brazil and flooding in Argentina are likely to keep the oils and oilseeds market firm.
Chicago Board of Trade (CBOT) soyabean May contracts ruled at $13.72 a bushel. Crude palm oil rose to 2,748 ringgit or $837 a tonne on Bursa Malaysia Derivatives Exchange in early trading.
Higher export enquiries and concerns over US winter wheat are likely to keep the grain prices firm. Rains in parts of Brazil raising hopes of the crop being salvaged are likely to put pressure on corn (industrial maize).
CBOT wheat for delivery in May ruled at $6.19 a bushel and corn for the same month at $4.56 a bushel.