Gold will likely drop as prices dropped in the global market on fears that it is not safe to invest in the precious metal.

Investors are also cutting their holdings in exchange-traded funds with as much as 100 tonnes drop this month. It is for the first time in 16 years that gold is seeing such a drop.

Market also fears that the US may curb its spending to pump up the economy which seems to be recovering.

Spot gold

In early trade at Singapore, spot gold was quoted below $1,600 an ounce at $1,597.50 an ounce, while gold for April contract slipped to $1,597.80.

In the domestic market on Wednesday, gold for jewellery (99.5 per cent purity) closed higher at Rs 29,605 for 10 gm, while pure gold (99.9 per cent purity) ended at Rs 29,740.

The rupee rose on Wednesday and if it continues, then gold could even head lower since a falling Indian currency against the US dollar makes import of commodities such as gold, crude oil and vegetable oils cheaper.

Soyabean, palm oil

Oils and oilseeds complex could be range-bound as soyabean on the Chicago Board of Trade (CBOT) gained on tight delivery of old crop. However, new deliveries are ruling easy. Malaysian palm oil, too, is in the firm grip of bears.

In early trade, CBOT soyabean for April contract was up at $14.4625 a bushel, while on Bursa Malaysia Derivatives Exchange crude palm oil for May contract closed lower at 2,410 ringgit ($777) a tonne.

Wheat, corn prices

With grains prices falling, a sudden interest in buying has propped up the counter. Wheat and corn (industrial maize) could gain a little on Thursday.

On CBOT, corn for May contract ruled higher at $6.975 a bushel and wheat contracts were up at $7.145 a bushel.

Crude oil

Crude oil gained in line with the gain in equities and therefore, it may gain further. Brent crude for delivery in April was up at $112.26 a barrel and NYMEX crude at $93.18.

Natural rubber could also gain as it rebounded in Tokyo and Shanghai after dropping to a two-month low.

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