Gold is likely to be range-bound with a slight bias towards the upper side on Friday in the domestic spot and futures markets.
The precious metal is likely to be held at current levels on physical buying in Asia, especially Japan and China. But the question is how long?
Every drop is supported by physical buying in Asia and every rise is used by investors to cash out. Over $66 million has been cashed from the bullion market in the recent bearish run.
Holdings of gold in electronic form have also dropped to a four-year low of 935.17 tonnes. And the decline in holdings continues even as gold finds it tough to overcome resistance at $1,300 an ounce.
US Federal Reserve Chairman Ben S. Bernanke could have helped gold’s cause by saying that there is no preset course to end the monthly $85-million stimulus programme. But his statement to the Senate that investors see reduced need for disaster insurance through gold is not going to help the yellow metal’s cause.
According to Bernanke, people are less concerned about the extreme outcomes, particularly negative outcomes and therefore, they feel less need for whatever protection gold affords.
And more US jobs added in the US means the economy is shaping up. More reasons then, for staying away from the precious metal.
Spot gold, gold futures
In early Asian trade, spot gold ruled higher at $1,290.15 an ounce and gold futures maturing in December at $1,290.40.
In the domestic market on Thursday, gold for jewellery (99.5 per cent purity) ended lower at Rs 26,650 for 10 gm and pure gold (99.9 per cent purity) at Rs 26,790. On the MCX, August contracts could rise towards Rs 26,400.
Crude oil prices
Crude oil is set to head north on cues of economic growth from the US jobs data. Brent crude to be delivered in September was up at $108.86 a barrel, while West Texas Intermediate for the same month rose to $108.16.
The oils and oilseeds complex is likely to come under pressure on forecast that the weather in the US growing areas will be favourable for the soyabean crop. The start of the peak palm oil tapping season will add to the bearishness.
Soyabean, crude palm oil
On Chicago Board of Trade (CBOT), soyabean for delivery in November fell to $12.70 a bushel. On Bursa Malaysia Derivatives exchange, crude palm oil futures maturing in October dropped to 2,281 ringgit or $712.50 a tonne.
Corn (industrial maize) and wheat will also head south on upbeat weather forecast that will in particular help pollination in corn.
Corn, wheat futures
CBOT corn futures maturing in December were lower at $4.99 a bushel. Wheat futures maturing in September ruled at $6.63 a bushel.
Natural rubber prices are likely to rule firm on soaring crude oil from which its alternative synthetic rubber is derived.
December rubber contracts on the Tokyo Commodity Exchange were up at 262 yen or Rs 152.80 a kg with a weak yen adding to the rising trend.