Gold is set for further fall on the spot and futures market on Wednesday as it dropped to a three-week low in the global market.
The gold market has been awaiting news on the US Federal Reserve’s statement on cutting down its stimulus programme.
The indication finally arrived last night with the Fed Bank of Chicago President Charles Evans saying the improvement in the labour market could lead to winding down of the $85-billion a month bond purchase programme.
It has been one of the reasons why a host of data indicating that growth is yet to take off being unable to lead gold higher. Investors, too, seem to be too keen on cashing out of the metal.
Electronic holdings of gold
A perfect example of investors fleeing gold is the electronic holdings of gold in SPDR Trust, the world’s largest gold exchange-traded fund, dropping by another two tonnes to 915.04 tonnes on Tuesday.
With the rupee recovering against the dollar, the impact of currency movement could be minimal on the bullion market. A decline in the rupee against the dollar makes import of gold, crude oil and vegetable oils costlier.
Spot gold, gold futures
In early Asian trade, spot gold dropped to $1,278.55 an ounce and gold futures maturing in December to $1,277.50.
In the domestic market, gold for jewellery (99.5 per cent purity) dipped to Rs 28,305 for 10 gm and pure gold (99.9 per cent) to Rs 28,440. On MCX, October gold contracts could drop below Rs 27,750.
Crude oil inventories
A drop in crude inventories in the US is likely to keep oil prices hot. Speculation is that data could show the stockpiles at six-month low.
Brent crude oil futures maturing in September ruled at $108.9 a barrel and West Texas Intermediate oil at $105.37.
The oils and oilseeds complex could come under pressure on estimates that Brazil’s soyabean output could be higher than the projections by the US Department of Agriculture.
Soyabean, crude palm oil
With the US soyabean crop at the setting stage and outlook for weather being bright, pressure has mounted on the oilseed. The USDA has reported that at least 64 per cent of the crop is in excellent condition.
Speculation that China may not order more US soyabean is another bearish factor.
Chicago Board of Trade soyabean for November delivery quoted at $11.69 a bushel. Crude palm oil on Bursa Malaysia Derivatives Exchange slipped to 2,207 or $679 a tonne for futures maturing in October.
Corn, wheat prices
Weather is seen as a drag factor for corn with even regions which were reported to be a little dry, receiving rain. CBOT corn that will be delivered in December dropped to $4.60 a bushel.
Wheat, on the other hand, gained marginally on Egypt entering the global market looking to buy some grain. CBOT wheat due to delivery in September ruled at $6.50 a bushel.
Rubber is likely to rule firm on the spot as transportation in Kerala, where over 90 per cent of the commodity is grown, being thrown out of gear due to heavy rains.
Futures, however, may head lower as benchmark Tokyo Commodity Exchange futures dropping. TOCOM January rubber futures were down at 249.8 yen or Rs 156 a kg.
Keywords: Gold prices, spot gold, gold futures, Federal Reserve statement, Federal Reserve stimulus programme, Fed Bank of Chicago, US labour market, rupee, dollar, crude oil, crude palm oil, soyabean, corn prices, wheat futures, natural rubber,