Gold prices on domestic spot and futures market on Tuesday will depend on the rupee’s movement with the global markets ruling flat.
In New York and London, gold stayed near the lowest level seen in the second week of October as traders expect the US Federal Reserve to trim its $85 billion monthly stimulus package programme soon.
The fact that gold has been ruling below $1,300 an ounce during the last couple of sessions means that investors, particularly in Asia, no more see value in the yellow metal at this level. While hedge funds and money managers have increased their bearish bets on gold, holdings of the precious metal in exchange-traded funds continue unchanged.
Gold holdings and US jobs data
Gold holdings in SPDR Trust, world’s biggest gold exchange-traded fund, were unchanged at 868.42 tonnes.
The precious metal may derive further clues from the US weekly retail sales and employment trend index, due later in the day.
Despite a global downtrend, the price of the yellow metal has been rising in the domestic market. This contrasting trend is mainly since the rupee has slid against the dollar. Any drop in the Indian currency, which dropped to a two-month low on Monday, against the dollar makes imports of gold, crude oil and vegetable oils costlier.
Spot gold, gold futures
On Tuesday, if the rupee recovers gold will drop. The vice-versa will happen if the Indian currency slips further.
In early Asian trade, spot gold in Singapore fell to $1,280.31 an ounce and gold futures maturing in December to $1,279.40.
In the domestic market on Monday, gold for jewellery (99.5% purity) rose to Rs 30,845 for 10 gm and pure gold (99.9% purity) to Rs 30,990.
On MCX and NCDEX, gold December contracts will continue trading below Rs 30,000.
Crude oil prices are likely to head south on prospects of stockpiles in the US rising. This is proving to be dampener against the rising trend seen on Monday after talks by a group of six nations with Iran on its nuclear programme ran into rough weather.
Brent crude contracts maturing in December quoted at 106.20 a barrel and US crude for the same month at $94.84.
Soyabean, crude palm oil
Edible oils and oilseeds may head lower on Tuesday as arrivals of the kharif crops pick up pace. Global signals, too, are bearish with Malaysia reporting higher palm oil production and lower exports. Though soyabean acreage is lower in the US, Brazil’s report of better planting is now putting pressure on the market.
Chicago Board of Trade soyabean January contracts ruled at $12.97 a bushel, while crude palm oil January contracts on Bursa Malaysia Derivatives Exchange fell to 2,511 ringgit or $785.55 a tonne.
Corn, wheat prices
Corn (industrial maize) and wheat prices could rise. Corn is set to gain on short-covering by funds, which had gone on a selling spree. The gain is despite projections of a record global crop and carryover stocks.
Wheat, on the other hand, will tend to gain on China fixing a higher ceiling of 9.6 million tonnes for imports. In addition, the outlook of the wheat crop from South America, particularly Argentina, is still unclear.
CBOT corn for delivery in December rose to $4.36 a bushel and wheat December contracts were up at $6.47 a bushel.