Gold is likely to range-bound in the domestic market on Tuesday as it could be caught between price rebounding in the global market and a drop in the dollar.

In early Asian trade, gold increased to $1,653.05 an ounce after having dropped below $1,650 in overnight trade. Gold for delivery in February, however, was quoted at $1,648.80.

The yellow metal gained in Asia on signs of buying by China that is fast turning out to be the biggest buyer in the global market.

On the other hand, the dollar dropped against the basket of currencies. A falling dollar makes imports of commodities such as gold, crude oil and vegetable oil cheaper.

In the domestic market on Monday, gold for jewellery (99.5% purity) was up at 30,650 for 10 gm, while pure gold (99% purity) closed higher at Rs 30,790.

The oils and oilseeds complex is likely to gain as soyabean increased on the Chicago Board of Trade overnight on fears that reserves held by the US dropped to a nine-year low following a drought that is seen as the worst in the last 50 years.

Soyabean for delivery in March was up at $13.88 a bushel.

Crude palm oil on Bursa Malaysia Derivatives Exchange closed lower than $800 a tonne on Monday for the active March contract. It ended at 2,418 ringgit ($795.52) a tonne.

The grains complex is likely to see a rise on the heels of reports of fall in US reserves.

On CBOT, wheat for delivery in March ended at $7.52 a bushel, while corn for delivery the same month closed up at $6.85 a bushel.

Crude oil and natural rubber will likely gain on global cues. Crude oil opened higher in Asian trade on reports of higher refinery operation.

Brent crude oil for February was up at $111.43 a barrel, while NYMEX crude ended higher at $93.17 a barrel.

This could see natural rubber up as its alternative synthetic rubber derived from crude oil will quote higher.

(This article was published on January 8, 2013)
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