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Gold is set to gain further on Wednesday in the domestic spot and futures markets as Cyrpus Parliament struck down a proposal to tax bank account holders. The turning down of the proposal has given rise to fears of a payment default by the tiny European nation, thus forcing investors to shift to haven instruments such as gold.
A meeting of the US Fed is also keeping the market interested since it could take into account the brewing crisis in Cyprus.
With an overwhelming 36 lawmakers rejecting the 10 billion euro package and another 19 abstaining, a question mark hangs over the European bailout.
In early trade at Singapore, spot gold ruled at one-month high of $1,612.26 an ounce. Gold futures for delivery in April quoted at $1,611.20 an ounce,
Cyprus rejection of the package also led to the dollar gaining. Any rise in the US currency against the Indian rupee will make gold costlier since imports of commodities such as the yellow metal, crude oil and vegetable oil will turn dearer.
In the domestic market on Tuesday, gold for jewellery (99.5% purity) rose to Rs 29,695 for 10 gm, while pure gold (99.9% purity) increased to Rs 29,835.
The oils and oilseeds complex may gain, apart from the rupee factor, as China’s inventories are report to be low. Overnight, it lifted soyabean on the Chicago Board of Trade (CBOT) with Brazilian port problems adding to the bullish factors.
Soyabean May contracts rose to $14.16 a bushel. On Bursa Malaysia Derivatives Exchange, crude palm oil June futures were up on Wednesday at 2,423 ringgit ($775) a tonne.
Falling prices of grains are leading to buyers showing interest to build inventories. Hence, the grains complex could also look up, though the Cyprus factor may now check or pare gains.
On CBOT, wheat May contracts were up at $7.26 in early Asian trade, while corn contracts for the same month quoted at $7.28.
Brent crude could also now head lower. In early trade, Brent May futures ruled at $107.75 a barrel, while NYMEX crude for delivery next month quoted at $92.22.
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