Gold could lead bull’s charge in the commodities market on Thursday, though it remains to be seen how much the bullishness will extend.

Reasons for various commodities gaining could be different and therein lies the doubt since one factor can cancel the other. So, trade with caution.

Fed booster

Overnight, US Federal Reserve Chairman provided gold a booster show by saying that the central bank will be accommodative in approach towards pumping money in the economy to help it grow. This, the market, meant as the $85-billion-a-month stimulus programme will not end soon.

Expectations that China could also ease its monetary policy are also aiding the uptrend.

Spot, futures gold

Gold gained three per cent overnight and sustained it in early Asian trade.

Spot gold in Singapore was up at $1,284.53 an ounce, while gold futures maturing in August were up at $1282.40.

In the domestic market on Wednesday, gold for jewellery (99.5 per cent purity) rose to Rs 26,210 per 10 gm and pure gold (99.9 per cent purity) to Rs 26,345. On MCX, August gold could climb above Rs 26,100.

Rupee Vs dollar

The rupee, whose weakness against dollar could make imports of gold, crude oil and vegetable oil, will have a negligible role to play as these developments will hold sway.

Crude oil

Crude oil is also likely to head north as US stockpiles were down for the second consecutive week. Brent crude for delivery in August ruled firm at $108.20 a barrel and West Texas Intermediate crude for delivery in the same month at $106.35.

If Bernanke talked gold up, weather outlook in the US Mid-west region could heat up the oils and oilseeds complex. Projections of heat wave in the Midwest are seen as affecting the soyabean crop in the US. The drop in Malaysian palm oil stocks is also likely to aid the uptrend.

Soyabean, crude palm oil

Chicago Board of Trade soyabean November contract rose to $12.84 a bushel and crude palm oil for September contract on the Bursa Malaysia Derivatives Exchange ruled at 2,371 ringgit ($749) a tonne.

The US weather outlook of heat wave this week-end and also next week is driving corn (industrial maize) and wheat too. Corn and soyabean are seen as most vulnerable to the heat wave.

CBOT corn futures maturing in December were up at $5.23 a bushel and wheat futures maturing in September gained to $6.82 a bushel.

Natural rubber

Natural rubber could rule firm, as its alternative synthetic rubber derived from surging crude oil, is likely to gain. However, in India the wide disparity between domestic and global market could act as a dampener.

China’s curbs on automobiles will also likely drag the complex.

However, on the Tokyo Commodity Exchange, rubber that will be delivered in December climbed to 239.5 yen or Rs 143.75 a kg.

(This article was published on July 11, 2013)
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