Gold prices on domestic spot and futures markets are likely to rule flat on Wednesday, trading sideways, as the market searches for a direction.
Prices have dropped to five-month low in the global market on a slew of data across the global signalling revival of the economy. Another set of data are due in the next couple of days and they hold key on how gold could behave going forward. It could also determine if the US Federal Reserve will finally take a call on tapering its $85 billion a month stimulus programme to keep the economy going.
As of now, indications are that the tapering could begin. Other indications are that gold is likely to continue reeling under pressure. Analysts tracking gold forecast further fall in the yellow metal next year.
In India, gold could rise if the rupee weakens as any fall in the Indian currency against the dollar makes imports of gold, crude oil and vegetable oils dearer. Gold holdings in exchange-traded funds fell further. Holdings in SPDR Trust, world’s biggest gold exchange-traded funds, dropped to 841.41 tonnes.
Spot gold, gold futures
In early Asian trade, spot gold ruled at $1,221.39 an ounce and gold futures maturing for delivery in February at $1,220.70.
In the domestic market on Tuesday, gold for jewellery (99.5% purity) fell to Rs 30,490 and pure gold (99.9% purity) to Rs 30,640.
On MCX and NCDEX, gold February contracts are likely to trade between Rs 28,000 and Rs 28,500.
Crude oil stockpiles
With US stocks dropping to a two-month low and OPEC likely to keep its supply unchanged, crude oil prices are likely to increase.
Brent crude for delivery in January rose to $112.40 a barrel and US crude to $97.24.
The oils and oilseeds market could cool on the US being unable to find new buyers and benign weather aiding crop in South America. In India, higher kharif oilseeds arrivals are weighing heavily on the market.
Soyabean, crude palm oil
Chicago Board of Trade soyabean contracts maturing for delivery in January ruled at $13.22 a bushel. Crude palm oil February contracts opened higher on Bursa Malaysia Derivatives exchange at 2,635 ringgit or $818.50 a tonne.
Value buying could and short-covering besides the end of corn harvest in US could push up grain prices. But the presence of France and India in the global wheat market with excess supplies could cap the gains. Chinese rejection of US corn on grounds of presence of GMO could be another dampener.
CBOT wheat for delivery in March ruled at $6.69 a bushel and corn for the same month at $4.32 a bushel.