Gold is likely to be range-bound at until mid-day in the domestic market as traders will await the RBI’s mid-year monetary policy. Any cut in interest rate could help gold gain since they could see better prospects in investing in the yellow metal as it would fetch better returns. Currency movements will also hold the key even as the dollar slipped against a basket of currencies on hopes the US fiscal crisis will end amicably.
In early trade, gold was near $1,700 an ounce, quoting at $1,699.14 in Singapore. Gold futures for delivery in February ruled at $1,700.70.
Currency movement is seen crucial since any rise in the rupee will make imports of commodities such as gold, edible oil and crude oil cheaper. These three commodities top in imports as India buys them from abroad to meet its rising need.
The oils and oilseeds market could also be seen in ranges after soyabean dropped on the Chicago Board of Trade. The drop followed the complex hitting $15 a bushel at one point of time during overnight trade.
Soyabean for delivery in March slid to $14.8825 a bushel.
Malaysia crude palm oil January contracts ended up at MYR2,275 on Monday.
Wheat and corn (industrial maize) is likely to come under pressure after corn plunged to its highest in a week on CBOT as demand slowed in the US. A report from the US Department of Agriculture showed that corn sales dropped and grain-based ethanol production dropped in the first week of this month.
On the CBOT, corn for delivery in March declined to $7.24 a bushel, while wheat for delivery the same month fell to $8.08 a bushel.
Crude oil is likely to come under pressure after Brent crude slid overnight. Brent crude oil in early trade was quoted at $107.64, while NYMEX crude ruled at $87.20 a barrel.
This could see natural rubber also slip as its alternative synthetic rubber, derived from crude oil, will quote lower.
Keywords: Gold, domestic commodity market, RBI’s mid-year monetary policy, cut in interest rate, dollar, US fiscal crisis, rupee, cheaper commodity imports, oils and oilseeds, soyabean, Chicago Board of Trade, Malaysia crude palm oil, Wheat, corn (industrial maize), US Department of Agriculture, Crude oil, Brent crude slid, NYMEX, natural rubber, synthetic rubber