Gold prices in the domestic spot and futures market are likely to trade with a negative bias as the global market shows signs of nervousness, particularly over the US Federal Reserve plans to cut its stimulus programme.
Data showing that US jobless claims dropped last week and rising consumer sentiment are possibly indicators for the US Fed to start tapering its $85-billion-a-month programme of buying bonds to keep the economy going.
But the drop in spending on capital goods and rise in Chinese purchases, with imports from Hong Kong rising to a near record, are expected to provide a cushion from any sharp fall.
Currency moves could also have a say since a weak rupee against the dollar makes import of gold, crude oil and vegetable oils costlier.
Gold holdings in exchange-traded funds continue to be low with the SPDR Trust, the world’s biggest fund, reporting its gold holdings at 843.21 tonnes.
Spot gold, gold futures
In early Asian trade, spot gold dropped to $1,237.97 an ounce and gold futures for delivery in February fell to $1,237.30.
In the domestic market on Wednesday, gold for jewellery (99.5 per cent purity) gold slumped to Rs 30,465 for 10 gm and pure gold (99.9 per cent purity) to Rs 30,615.
On MCX and NCDEX, gold futures could drop to the levels of Rs 30,000.
Crude oil supplies
Brent crude is likely to rule firm on concerns over labour problems in Libya as supplies could be affected. On the other hand, US or NYMEX crude could head lower on higher stockpiles in the US.
Brent crude for delivery in January ruled at $111.41 a barrel and US crude at $92.25 a barrel.
Range-bound trading
The oils and oilseeds market could be range-bound on US reporting sale of 2.35 lakh tonnes of soyabean to an unknown destination. This has to an extent helped overcome the negative effects of China cancelling over three lakh tonnes export deals.
The market is also under pressure from rising kharif oilseed arrivals in India and prospects of conducive weather in South America. Profit-booking is also coming into play in the futures market.
On Chicago Board of Trade, soyabean contracts maturing for delivery in January dropped to $13.20 a bushel. Crude palm oil on Bursa Malaysia Derivatives for delivery in February was settled at 2,640 ringgit or $816 a tonne.
Prices in the domestic market are set to come under pressure.
Short-covering lifts prices
Corn (industrial maize) and wheat could gain, reflecting the trend in the global market where short-covering lifted their prices. Besides,
Brazil is looking to buy more wheat, while US reported a rise in ethanol supplies last week. US farmers refusing to part with their produce at lower levels is also keeping prices steady.
CBOT wheat for delivery in March rose to $6.63 a bushel and corn contracts for the same month at $4.26 a bushel.