Gold will likely decline after prices in the global market fell below the psychological level of $1,650 an ounce. This was due to lack of physical demand, especially in Asia.
In the domestic market too, pressure is on the yellow metal due to lower agricultural production. With the rupee tending to rise, the fall in the yellow metal could be cushioned a bit.
A fall in the rupee against the dollar will make imports of commodities such as gold, crude oil and vegetable oils dearer. On the other hand, export of commodities such as wheat and corn (industrial maize) will turn competitive.
In early trade at Singapore, gold was down at $1644.55 an ounce, while gold April contracts quoted lower at $1,649.10 an ounce.
In the domestic market on Monday, gold for jewellery (99.5% purity) slipped to Rs 30,435 for 10 gm, while pure gold (99.9% purity) declined to Rs 30,575.
The oils and oilseeds counter could head lower with the USDA’s bearish projection on soyabean production. The oilseeds production is seen rising 28 per cent to a record 136.5 million tonnes. The Malaysian palm oil market is close for the Chinese New Year.
On the Chicago Board of Trade, soyabean March contracts dropped to $14.31 a bushel.
The grains complex will also be under pressure in view of lack of export orders and a jump in production. On CBOT, wheat March futures dropped to $7.41 a bushel and corn for same monthslid to $7.02 a bushel.
Crude oil, however, will likely rule firm on hopes of economic recovery. Brent crude for delivery in March declined to $118.03 a barrel, while NYMEX crude for the same month fell to $96.87.