Gold prices on domestic spot and futures markets are likely to come under pressure with Russia opposing US plans of military strike against Syria. This has eased concerns of geo-political tensions in West Asia.
Later tonight, the US Federal Reserve will release a report on the regional economies and it will hold clues on how the US will go about unwinding its $85 billion-a-month programme to boost its economy.
Rupee Vs dollar
Gold will also face pressure on reports that Indian consumers are selling gold at current prices which are at a record, as the Indian currency has plunged against the dollar. The new RBI Governor, Raghuram Rajan, is also seen taking more pro-active measures to lift the rupee.
Any rise in the rupee against the dollar will make imports of gold, crude oil and vegetable oils cheaper.
The point is gold will trade sideways until clear signals emanate on Syria, where a limited US action is not ruled out, and the economy. The US Fed is set to spell out its policy on continuing stimulus next week.
Spot gold, gold futures
In early Asian trade, spot gold edged up marginally to $1,393.69 an ounce and gold futures maturing in Dcember to $1,393.40.
In the domestic market, gold for jewellery (99.5% purity) dropped on Wednesday to Rs 31,940 for 10 gm and pure gold (99.9% purity) to Rs 32,100 in Mumbai.
On MCX, gold October contracts could trade under Rs 35,000.
Brent, WTI crude
Crude oil will likely be soft as doubts over action against Syria linger and concerns over supply from West Asia ease.
Brent crude contracts maturing in October dropped to $114.99 a barrel and West Texas Intermediate for the same month at $107.45.
The oils and oilseeds complex will head south as weather is unlikely to have any major impact on the soyabean crop in US Midwest. A cooler weather is projected in the days ahead, besides the hotter than normal weather is seen as advantageous for the crop.
The rise of the Indian rupee against the dollar could also aid the trend.
Soyabean, crude palm oil
Chicago Board of Trade (CBOT) soyabean for delivery in November ruled lower at $13.66 a bushel. On Bursa Malaysia Derivatives Exchange, crude palm oil for delivery in November quoted lower at 2,399 ringgit or $731 a tonne.
Corn, wheat futures
With corn seen less affected by weather factors, the grains complex is also expected to drop. Export prospects too have got clouded in view of the rupee’s rise.
CBOT corn contracts maturing in December quoted at $4.68 a bushel and wheat contracts for the same month at $6.45 a bushel.