A rising dollar and fall in gold holdings in electronic format globally are set to drive gold further lower on Thursday on the domestic spot and futures markets. Overnight, the yellow metal plunged below $1,400 an ounce.
Holdings in gold exchange-traded funds have dropped to the lowest since 2009 and with stock markets rallying, investors find equities more attractive than gold.
In early Asian trade, spot gold was quoted at $1,395.17 an ounce, while gold futures maturing in June ruled at $1,393.70.
In the domestic market on Wednesday, gold for jewellery (99.5% purity) fell to Rs 26,760 an ounce and pure gold (99.9% purity) to Rs 26,900.
On MCX, gold June contracts could slip to Rs 26,500, while August series could test Rs 26,600.
Currency movements could have little effect on gold since the fall is sharp. Though the dollar’s gain could make imports of gold, crude oil and vegetable oils dearer, the plunge could render it infructuous.
Crude oil could be range-bound on hopes of stimulus measures curbs fall in prices due to higher inventories.
Brent crude June contracts quoted at $103.52 a barrel, while West Texas Intermediat (NYMEX) ruled at $94.07.
Lower crushing by processors dragged soyabean lower on the Chicago Board of Trade (CBOT). This could pull down the oils and oilseeds counter.
CBOT soyabean contracts maturing in July ruled at $14.16 a bushel, while crude palm oil futures on Bursa Malaysia Derivatives Exchange slipped to 2293 ringgit ($762.50) a tonne.
Grains may be pounded
The grains complex is seen under pressure on forecast of a higher global crop. Wheat production is seen at a record 701 million tonnes, leaving ample supplies.
CBOT wheat July contracts fell below $7 a bushel to $6.94, while corn (industrial maize) contracts for the same month ruled at $6.49 a bushel.
Rubber prices are set to drop in the domestic market on cheaper crude oil from which synthetic rubber is derived. On Tokyo Commodity Exchange, rubber October futures dropped to 276.3 yen a kg or Rs 148.25.