Gold may yo-yo as investors try to book profits

M. R. SUBRAMANI Chennai | Updated on March 12, 2018


Gold prices on domestic spot and futures markets are likely to be volatile on Thursday after the global market saw the yellow metal scale $1,250 an ounce at one point of time and then pare gains in early Asian trade. Still, the precious metal could see some upside despite the profit-booking that is being witnessed in early trade.

Some interest in gold was seen overnight that could be attributed to two reasons. One, to cover up short positions various players had built expecting the precious metal to drop. These players expect gold to come under pressure over the next two days as key data from US on GDP and non-farm pay rolls are due tonight and tomorrow.

Two, funds whose new fiscal begins in December bought gold.

Reuters reported that prices jumped after 32,000 contracts were traded in a 40-minute window afternoon in New York. This saw gold vault above $1,250 an ounce at one point of time.

The market now seems to be pretty sure of the US Federal Reserve pruning its $85 billion a month bond purchasing programme to keep the economy going. A decision on the timing of the tapering is likely at the US Fed meeting during December 17-18.

Despite all the activities, holdings in gold exchange-traded funds continued to decline. SPDR Trust, world’s biggest exchange-traded fund, said gold holdings with it dropped further to 838.71 tonnes.

Spot gold, gold futures

In early Asian trade, spot gold had given up half of its gains and traded at $1,238.39 an ounce and gold futures maturing for delivery in February at $1,237.90.

In the domestic market on Wednesday, gold for jewellery (99.5% purity) ended higher at Rs 30,565 and pure gold (99.9% purity) at Rs 30,715 for 10 gm.

On MCX and NCDEX, gold February contracts could try to top Rs 30,000.

Crude oil stockpiles

Brent crude is likely to rule higher on US stocks dropping to a 10-week low and OPEC deciding to keep its production unchanged.

Brent crude for delivery in January was up at $111.56 a barrel and US crude at $97.14.

The oils and oilseeds market is likely to come under pressure on Canada reporting a higher canola crop. Threat of China cancelling soya shipments from the US are also dampening sentiments, while demand for soyameal could cushion any fall.

Soyabean, crude palm oil

Chicago Board of Trade soyabean for delivery in January ruled at $13.31 a bushel. Crude palm oil for delivery in February on Bursa Malaysia Derivatives Exchange closed lower on Wednesday at 2,656 ringgit or $822 a tonne.

Corn (industrial maize) may gain on value-buying and short covering, while wheat may trip after Canada raised its production estimate.

CBOT corn slipped to $4.35 a bushel for delivery in March and wheat contracts for the same month to $6.59.

Published on December 05, 2013

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