Bears in gold market have found another reason to drag the precious metal prices. This time, it is the schedule meeting of the US Federal Reserve that could perhaps decide on cutting back the $85-billion-a-month stimulus package.
This is something the market has been looking up to but a host of developments and data showing that growth is still lagging has been holding up gold. Will gold hold up again?
Growth, employment data
Let’s see but as of now there are quite a few things that will be up for consideration for the market in the next two days. Besides the meet, there is US data on growth and employment that are due. Then, the Bank of England and European Central Bank too hold policy meetings this week.
Other data available in gold are also mixed. While the holdings of gold in electronic format in exchange trade funds continue to be low, hedge funds and investors have raised their bullish bets on gold last week to a four-month high.
Spot gold, gold futures
In the domestic market, gold is likely to be under pressure on the spot and futures markets.
In early Asian trade, spot gold in Singapore ruled at $1,328.64 an ounce and futures for delivery in December at $1,328.80.
In the domestic market on Saturday, gold for jewellery (99.5 per cent purity) closed at a month’s high of Rs 27,945 for 10 gm and pure gold at 28,085.
On MCX, gold October contracts could drop to Rs 27,250.
Rupee Vs dollar
Currency movements are unlikely to have any major say since the rupee seems to have stabilised. A weak rupee against the dollar makes import of commodities such as gold, crude oil and vegetable oils costlier.
WTI, Brent crude
Crude oil is set to head south on slowing demand in emerging markets.
Brent crude for delivery in September quoted at $107.26 a barrel and West Texas Intermediate oil for the same month at $104.42 a barrel.
The oils and oilseeds complex will come under pressure on reports that Brazil and Argentina have harvested 24 per cent higher soyabean this year.
The South American production will add to higher crop that is expected to be harvested late this year by the US. Peak palm oil production season and high inventories are other bearish factors.
Soyabean, crude palm oil
Chicago Board of Trade soyabean futures maturing in November dropped to $12.12 a bushel. Crude palm oil futures maturing in October dropped to 2,176 ringgit or $678.30 a tonne.
The grains complex could be mixed with wheat gaining and corn (industrial corn) coming under pressure of projections of a better crop.
A huge rise in Chinese imports and US exports increasing by 45 per cent in the last two months are factors that will spur wheat. Lower rates of wheat are also resulting in more purchases.
Wheat, corn futures
CBOT wheat futures maturing in September were up at $6.50 a bushel.
Corn will likely come under pressure on projections of better weather in the US Midwest, which holds the key to good production. Reports also say that production could rise by over 20 per cent in the main growing US belt.
Corn futures maturing in December dropped to $4.75 a bushel on CBOT in early Asian trade.