Gold will likely gain, at least marginally, in the domestic market after prices in the global market increased to a week’s high.

Data showing a faltering US economy and the US Federal Reserve Bank’s decision to continue with the stimulus programme continue to provide impetus to the yellow metal.

However, with the rupee rising to a three-month high against the dollar, much of the gains are being checked. This is because any rise in the rupee makes import of commodities such as gold, crude oil and vegetable oils — that top the import basket — cheaper.

Gold prices

In early trade at Singapore, spot gold was quoted at $1,676.90 an ounce, while gold futures to be delivered in April ruled at $1,677.50.

In the domestic market on Wednesday, gold for jewellery (99.5 per cent purity) slipped to Rs 30,210 for 10 gm, while pure gold (99.9 per cent purity) declined to Rs 30,350. The rupee, on the other hand, ended at a three-month high of 53.30 against the greenback.

Oils, oilseeds

Oils and oilseeds complex are set to witness a rally after soyabean gained on the Chicago Board of Trade (CBOT) overnight. This was since a dry weather threatens the crop in Argentina and Brazil, giving way to speculation that the US crop could be in demand at a time when the carryover stocks are 17 per cent lower.

On CBOT, soyabean for delivery in March rose to $14.7875 a bushel, while on Bursa Malaysia Derivatives Exchange, crude palm oil that will be delivered in April ended higher at 2,510 ringgit ($813) a tonne.

Grains prices

Grains complex will also see prices rising in view of the dry weather threat in South America. On CBOT, corn March contracts were up at $7.40 a bushel, while contracts for the same month quoted at $7.86 a bushel.

Problems with the South America crop and demand for US grains at a time when the carryover stocks are low could lead to demand for Indian maize (corn) and wheat. India has plenty of stocks to spare for exports.

Crude oil

Crude oil will likely rise on the back of the US Fed stimulus programme. Prices were at a four-month high with Brent oil that will be delivered in March rising to $115.02 a barrel. NYMEX crude, on the other hand, rose to $97.95.

Natural rubber will also tend to be bullish on two counts. One is the rise in crude oil prices since its alternative, synthetic rubber derived from crude oil, will gain. Two, is the rising sales of cars. These are bullish pointers at a time when there are problems with supplies.

(This article was published on January 31, 2013)
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