Gold prices in the domestic spot and futures market are likely to rise on Monday on hopes that the US Federal Reserve will prolong its tapering of the stimulus programme.

This follows a weak jobs report by the US on Friday. US jobs data showed that 74,000 jobs were added in December, much lower than even pessimistic forecasts.

Fed stimulus taper

This has triggered speculation that the US Federal Reserve, which has cut the stimulus programme by $10 billion to $75 billion, could be cautious in unwinding the booster.

But the US jobs cannot alone help the yellow metal rally and bets are that the precious metal could come under pressure later this week. One thing that has emerged clearly in gold’s decline last year is that it is no more a haven asset.

Rupee Vs dollar

In the domestic market, currency movement could have a minor say since a weak rupee against the dollar could make imports of gold, crude oil and vegetable oils costlier.

By mid-way in Asia, spot gold was up at $1,251.09 an ounce and gold February futures at $1,250.10.

On NCDEX, spot gold closed at Rs 29,600 on Friday. MCX and NCDEX gold futures for delivery in February could try to regain Rs 29,000 levels.

Crude oil may gain

Crude oil is likely to gain on expectation of a rise in the US demand on bets that the US Fed will go slow on paring stimulus.

Brent crude for delivery in February ruled at $107.11 a barrel and US crude at $92.44.

Soyabean production forecast

Oils and oilseeds market will continue to be under pressure with the US raising its forecast for soyabean production. However, it has also raised the forecast for demand. The Argentine crop is also seen benefitting from better weather, while Brazil has forecast a higher crop.

Chicago Board of Trade soyabean March contracts slipped at the opening in Asia to $12.76 a bushel. Crude palm oil for March delivery opened lower at 2,510 ringgit or $771.50 a tonne.

Corn, wheat may gain

Corn (industrial maize) is set to rise on the US projecting lower carryover stocks, while wheat could gain to keep its premium over the coarse cereal intact and demand from West Asia.

CBOT corn for delivery in March increased to $4.34 a bushel and wheat for the same month to $5.73 a bushel.

(This article was published on January 13, 2014)
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