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With prices having surged past $1,250 an ounce in the global market overnight, gold prices on domestic spot and futures markets are likely to rule higher on Wednesday.
Short-covering, a rise in the dollar and Asian demand, especially from China, lifted the yellow metal.
However, it is unlikely that the trend will be sustained, particularly with the US Federal decision on tapering of its $85 billion a month programme round the corner.
With budget talks in the US progressing smoothly, the upside for gold may be limited. The US Fed is meeting during December 17-18 and the market is seeing it as a crucial one for gold’s future.
A fall in the dollar against the rupee could cut some of the rise since a strong rupee makes imports of gold, crude oil and vegetable oils cheaper.
Spot gold, gold futures
In early Asian trade, spot gold began giving up its gain to rule at $1,258.90 an ounce and gold futures maturing for delivery in February slipped to $1,258.30.
On NCDEX, spot gold (99.5% purity) was quoted at Rs 30,300 for 10 gm.
Gold futures maturing in February on NCDEX and MCX are likely to try and scale Rs 30,000.
Crude oil stockpiles
Crude oil prices will likely rise as stockpiles in the US are feared to have dropped last week. However, Brent crude’s premium to US crude is seen narrowing on Libya’s decision to resume operations from its oil ports.
Brent crude for delivery in January ruled at $109.28 a barrel and US crude at $98.42.
Oils and oilseeds market
The oils and oilseed market is likely to head south on better prospect for the soyabean crop in South America. This is despite the USDA projecting lower carryover stocks.
The USDA is seeing the Argentine soyabean crop at a record 54.5 million tonnes, while Brazil is projecting its crop at over 90 million tonnes.
Chicago Board of Trade soyabean for delivery in January fell to $13.34 a bushel. On Bursa Malaysia Derivatives Exchange, crude palm oil for delivery in February opened lower at 2,633 ringgit ($821) a tonne.
Grains under pressure
Wheat prices are likely to come under pressure on USDA’s projection of record carryover stocks. In turn, this could put pressure on corn (industrial maize).
CBOT wheat for delivery in March ruled at $6.38 a bushel and corn for the same month at $4.34 a bushel.
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