Looks like gold could come under pressure on Thursday in the domestic spot and futures market.
Global prices dropped overnight as US home sales hit a five-year high. This has given rise to speculation that the US Fed may announce scaling down its stimulus package in September or it is somewhere around the corner.
Data from Europe last evening also played its part in helping the bears in the gold market.
Later in the day, data on German business climate, Italian consumer confidence, Euro zone money supply, US jobless claims and orders for US durable goods are set to shake and move the market.
Any signs of growth in these data are sure to lead to battering of the yellow metal. To start with, prices in India will head lower in the morning session.
Bears also helped in their cause with gold holdings in exchange-traded funds remaining unchanged despite a rise in prices on Monday.
Spot gold, gold futures
In early Asian trade, spot gold fell to $1,319.28 an ounce and futures maturing in December to $1,319.60.
On Wednesday, gold for jewellery (99.5 per cent purity) in Mumbai ended higher at Rs 28,080 for 10 gm and pure gold (99.9 per cent purity) at Rs 28,215. On MCX, gold October contracts could drop to Rs 27,500.
Currency movements, especially a weak rupee against the dollar that makes import of gold, crude oil and vegetable oils costlier, is likely to have minimum impact.
Crude oil prices
Crude oil is set to head south on surge in US output. This is despite drop in stockpiles.
West Texas Intermediate oil fell for a second day, extending the biggest drop in more than a month, as U.S. crude output surged to a 22-year high.
Brent crude for delivery in September was down at $107.1 a barrel and WTI for delivery the same month at $105.
The oilseeds and oils complex could see the bearish run extending with panic sales setting in the US as growers try to cut their holdings. This is on the back of a likelihood of a better crop with a conducive weather playing a major role.
The Indian monsoon’s fairy tale this year is helping in improving the plantings of oilseeds and that too doesn’t augur well for the bulls.
Soyabean, crude palm oil
On Chicago Board of Trade (CBOT), soyabean futures maturing in December dropped to $12.52. On Bursa Malaysia Derivatives Exchange, crude palm oil futures maturing in October dropped below the psychological level of $700 at the opening session to $692.70 or 2,208 ringgit a tonne.
Prospects of record corn (industrial maize) crop continue to weigh on the grains complex leading to the coarse cereal dropping to its lowest since October 2010.
Corn, wheat prices
CBOT corn in early Asian trade ruled at $4.81 a bushel for contracts maturing in November. Wheat, as a result, is set to head lower. CBOT September contracts were down at $6.53 a bushel.
Natural rubber could be range-bound with the Japanese yen breaching the 100-a-dollar level. This will help contracts in yen but the downside for it is the drop in prices of crude oil from which its alternative synthetic rubber is derived.
On the Tokyo Commodity Exchange, rubber futures maturing in December quoted at 256.9 yen or Rs 150.5 a kg.