Gold prices in the domestic spot and futures market are likely to rule range-bound as concerns over the US Federal Reserve pruning its programme to buy dollar and keep the economy going is being overcome by short-covering.
The short-covering is being made on a slew of economic data, including ones that showed that jobs in the US increased in November and economic growth is on track.
Fed stimulus taper
This has led investors to speculate that the US Federal Reserve could take a decision on ending the $85-billion-a-month stimulus programme at its meeting on December 17 & 18. This is in fact leading to flight of investors to other assets such as stocks.
Gold holdings in exchange-traded funds continue to drop with SPDR Trust, the world’s largest exchange-traded fund, reporting that holdings with it fell to 835.71 tonnes. On the other hand, bullish bets on gold have dropped to levels not seen in the last six years.
Aiding the bears in the market will be Chicago Fed President Charles Evans statement that he is open to tapering of the stimulus programme. Evans has been on of those supporting the programme ardently.
Trade data, employment trend index
Later in the day, gold could get further from German trade data, German industrial output and US employment trend index.
Earlier in the day, China reported that its inflation was lower in November compared with October and its factories paid less for their products in the same period.
Spot gold, gold futures
In early Asian trade, spot gold ruled at $1,299.88 an ounce and gold futures maturing in February at $1,299.10.
In the domestic market on Saturday, gold for jewellery (99.5 per cent purity) gained to Rs 30,575 and pure gold (99.9 per cent purity) to Rs 30,725 for 10 gm.
On MCX and NCDEX, gold February contracts are likely to trade between Rs 29,000 and Rs 29,500.
Crude oil is likely to firm up with slew of data showing rising economic activity and imports by China increasing.
Brent crude for delivery in January rose to $111.64 a barrel and US crude to $97.83.
Soyabean, crude pallm oil
The oils and oilseeds market will trade sideways as demand for soyabean from US is helping to overcome the effects of projections of better crop in South America. Fears that monsoon could affect palm oil production in Malaysia is also holding up the counter.
Chicago Board of Trade soyabean for delivery in January was up at $13.31 a bushel. Crude palm oil for delivery in February on Bursa Malaysia Derivatives rose to 2,678 ringgit or $828 a tonne.
Wheat, corn prices
Wheat prices are likely to gain on fears that adverse weather in the US, rising from a cold snap, could affect the crop. Corn (industrial maize) is likely to rule flat.
CBOT wheat for delivery in March was up at $6.53 a bushel and corn at $4.34 a bushel.
Natural rubber could gain both in the spot and futures market as data showed that China’s imports rose to a two-month high. Imports were at record, showing that Beijing has been mopping up stocks on rising demand.
On Tokyo Commodity Exchange, prices for May futures rose to a 11-month high.