Gold prices in the domestic spot and futures market are set to rise on Monday, reflecting the global trend driven by reshuffling of portfolios by investors and weak equities.

Gold holdings in exchange-trade funds rose the most on a single day on Friday, not seen for over two years now, while hedge funds and fund managers have increased their bullish bets on the yellow metal for a third consecutive week.

SPDR Trust, the world biggest gold exchange-traded fund, said the increase in holdings to 797.05 tonnes.

Haven buying

The current trend is seen as a sort of haven buying by investors. The precious metal has also been propped up by comments by President of Federal Reserve Bank of Minneapolis Narayana Kocherlakota that US policy makers should do more to stimulate the economy.

Mixed US data

Last week, data from the US were mixed. Retail sales, factory output and jobless claims were higher than estimates but housing starts, industrial production and consumer confidence were below expectations.

However, there is scepticism over gold’s current rally with analysts saying that it could come under pressure around $1,275 an ounce.

For the domestic market, currency movements will also matter since a weak rupee against a strong dollar makes import of gold, crude oil and vegetable oils costlier.

Spot gold, gold futures

In early Asian trade, spot gold was up at $1,256.60 an ounce and gold futures for February delivery at $1,256.20.

On NCDEX, spot gold on Saturday had ended at Rs 29,700 for 10 gm. On MCX and NCDEX, gold February contracts are likely to rise towards Rs 29,250.

China’s factory output

China’s factory production data that showed slower growth last month are likely to drag crude oil prices.

Brent crude futures for March delivery slipped to $106.24 a barrel and US crude to $93.71.

Oils & oilseeds

An estimate cutting the area under soyabean in the US and higher open interests are likely to help the oils and oilseeds market rule stable.

Chicago Board of Trade soybean contracts for March were up at $13.16 a bushel. Crude palm oil on Bursa Malaysia Derivatives Exchange for delivery in April was up at 2,560 ringgit or $773 a tonne.

Wheat and corn (industrial maize) prices will head lower on ample supplies and the likelihood of record carryover stocks.

CBOT wheat March contracts dropped to $5.63 a bushel and corn contracts for the same mom at $4.24 a bushel.

(This article was published on January 20, 2014)
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