With gold prices having dropped over one per cent overnight in the global market, the precious metal will likely head lower on spot and futures market on Wednesday.
Though the rupee’s fall threatens to reverse the bearish trend, the overnight fall has been too steep to prevent the drop. However, the rupee’s weakening against the dollar that makes imports of commodities such as gold, crude oil and vegetable oils costlier could slow the decline.
With speculation that the US Federal Reserve will pare its programme to pump more money into the economy, the rupee will come under more pressure as the dollar looks to surge. On Tuesday, the rupee had dropped to a record low of 58.77 to the dollar.
Wednesday morning saw Japan reporting higher exports in May, a sign of some progress in the economy. This is likely to boost the equities market and in turn, put further pressure on gold.
Though the precious metal nosed up a little at the opening in Asia, it is likely to face pressure from a slew of factors, starting from equities rally to cutting of its holdings in exchange-traded funds.
In Singapore, spot gold quoted at $1,369.35 an ounce, while gold futures maturing in August ruled at $1,368.60.
In the domestic market at Mumbai on Tuesday, gold for jewellery (99.5% purity) gained at Rs 28,025 for 10 gm and pure gold (99.9% purity) at Rs 28,170.
On MCX, August contracts could slip below Rs 26,800 on Wednesday.
Crude Oil flares up
Crude oil is likely to gain further as Brent and West Texas Intermediate (WTI) crude rose to their highest since September. This follows a drop in US stockpiles, while tensions in West Asia over Syria developments are also propping up the bulls.
Brent crude for delivery in August was up at $106.08 a barrel and WTI on NYMEX at $98.50.
Oils and Oilseeds
Though oils and oilseeds complex has been gaining on the back of the rupee’s plunge and rain curtailing arrivals, profit booking could emerge on Wednesday. Higher supply and better prospects for kharif oilseeds are other factors that could into play, energising the bears.
On Chicago Board of Trade, soyabean for delivery in November ruled at $12.89 a bushel. On Bursa Malaysia Derivatives Exchange, crude palm oil on Tuesday for delivery in September rose to 2,466 ringgit ($781) a tonne.
Blazing grains
The grains complex could gain on fears that the acreage in corn (industrial maize) could be lower and alerts of a hot dry weather next month in the US Midwest, the hub for growing corn.
Reports of delay in harvest and stable condition of US winter crop boosted wheat on CBOT.
In early trade, corn for delivery in December ruled at $5.48 a bushel, while wheat for delivery in September quoted at $6.82 a bushel.