Gold prices on spot and futures market are likely to be range-bound on Monday, looking for further cues to move either way.
But the immediate push for gold up would be the drop in the dollar as well as the fall in equities market. Both are slipping on fears that the US could soon end its stimulus programme of pumping money in the economy and buying bonds.
The dollar’s fall, however, need not result in rise in Indian gold prices since its fall against the rupee will make imports of commodities such as gold, crude oil and vegetable oils cheaper.
There are other indications, though, to keep the bulls and bears interested. One is gold holdings in exchange-traded funds are down to a four-year low. World’s biggest fund, SPDR trust said its holdings are now down to 1,016.16 tonnes, the lowest since 2009.
On the other side, IMF said that Russia and Kazakhstan expanded their gold reserves for the seventh month in running. In April, Russia’s holdings were up at 990 tonnes, while Kazakhstan’s holdings improved to 125.5 tonnes.
In early Asian trade, spot gold quoted at $1,391.32 an ounce, while gold futures maturing in August ruled at $1,389.60.
In the domestic market on Saturday, gold for jewellery (99.5% purity) increased to Rs 26,525 for 10 gm and pure gold (99.9% purity) to Rs 26,655.
On Monday, MCX June contracts could rule between Rs 26,400 and Rs 26,500, while August contracts will trade in the Rs 26,600-26,700 range.
Crude oil will continue to be cool on Monday on signs that China may be satisfied with slower growth of its economy. Brent crude July contracts slipped to $102.29 a barrel, while NYMEX or West Texas Intermediate crude contracts for the same month were down at $93.46.
Oils and Oilseeds
The oils and oilseeds complex could be under pressure as US farmers have increased their sales. But speculation over lower Malaysian palm oil stocks could provide support.
In early trade, Chicago Board of Trade soyabean for July delivery fell to $14.76 a bushel, while on Bursa Malaysia Derivatives Exchange crude palm oil August contracts rose to 2375 ringgit ($781.25) a tonne.
The grains complex is also seen under pressure as profit booking has set in after last week’s rally. Rising planting of corn (industrial maize) and reports of lower damage to wheat crop in the US are also aiding the downtrend.
CBOT’s wheat July futures fell to $6.97 a bushel and corn contracts for the same month quoted at $6.57 a bushel.