Gold eyes month-end Fed meet

Our Bureau | | Updated on: Mar 12, 2018

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Gold prices on domestic spot and futures market are likely to trade sideways as the focus now shifts to the US Federal Reserve meeting after US legislators reached a deal to raise the debt ceiling.

Late last night, US senators cleared the proposal to raise the ceiling limit and it is now likely to be endorsed by the House. Since this has already been factored in by the market, gold is unlikely to sway much.

The market will now begin taking bets on what the Fed Reserve will decide at its meeting during October 29-30.

Fall in gold’s value

On the other hand, Bloomberg reported that some of the best forecasters of gold see gold dropping further in the following four quarters.

At a gold industry meet in Jaipur, India, last month, experts were of the view that gold may not see much of an uptrend until 2015.

Aiding the downtrend further is the decline in holdings in gold exchange-traded funds. Holdings in world’s largest gold-exchange traded fund, SPDR Trust, fell to 885.53 tonnes.

One silver lining for gold, however, is the surge in sales of US gold coins this month. But this is attributed to the shut down and developments rest of this month could hold key on what investors really think of the precious metal.

In the domestic market, jewellers are lukewarm about festival sales, including Dhanteras when people flock to acquire gold. Activity at retails outlets is subdued and rains last week have caused some damage to standing kharif or summer crops. This could have an effect on rural buying, though a total picture will be available only early next month, when crop arrivals peak.

Spot gold, gold futures

In early Asian trade, spot gold ruled at $1,283.01 an ounce and gold futures contract maturing in December at $1,282.50.

The domestic market on Wednesday saw gold for jewellery (99.5% purity) rise to 30,605 for 10 gm and pure gold (99.9% purity) to Rs 30,775.

The domestic spot gold prices are not in sync with global prices mainly due to shortage of bullion. The yellow metal is now commanding a premium of nearly Rs 5,000 for 10 gm.

On MCX, gold for December delivery could trade within Rs 30,000.

Crude Oil

Crude oil could head north after the US lawmakers have agreed to raise the debt ceiling.

Brent crude December contracts were up at $110.86 a barrel and US crude contracts for the same month at $102.25.

Oils and oilseeds

The oils and oilseeds complex could scale higher as rains in the growing regions of US delay soyabean harvest. More importantly, the Chinese crushers seem to be buying more from the US. Recovery in soyameal demand is also helping the complex, while empty pipelines in India could also buoy sentiments.

Chicago Board of Trade soyabean contracts maturing in November rose to $12.79 a bushel in Asia. On Bursa Malaysia Derivatives Exchange, crude palm oil contracts maturing in January opened higher at 2,427 ringgit or $767 a tonne.

Grains complex

The grain complex could see prices slipping as corn (industrial maize) harvest gathers pace in the US. Wheat is witnessing profit-booking and the market factoring in all the negative developments.

CBOT corn for delivery in December quoted at $4.43 a bushel and wheat for delivery in the same month at $6.84 a bushel.

Published on October 17, 2013
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