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Gold prices in the domestic spot and futures market are set to head south on Wednesday, taking cues from the global market.
Overnight, equities rose as also the dollar, while data showed that the US trade deficit dropped to a four-year low.
Minutes of FOMC meet
These are signs strong enough to show economic recovery. The market now awaits the minutes of the Federal Reserve Open Market Committee meeting held last month to get to know about the Fed’s plan on the stimulus package.
The $85-billion stimulus package is being pruned to $75 billion from this month and views are that it could be wound up totally before the month-end.
Indications on global economy
Gold could trade sideways until US jobs data are out on Friday. Before that, some more indications will be available on the global economy later in the day from Germany’s November trade data, its industrial orders, Euro Zone retail sales and the zone’s unemployment.
Signs of recovery in the US will strengthen the dollar, in turn hurting gold. Rising equities too offer investors alternative options to gold.
Spot gold, gold futures
In early Asian trade, spot gold ruled lower at $1,229.04 an ounce and gold futures maturing for delivery in February at $1,228.30.
On NCDEX, spot gold had ended lower at Rs 29,500 for 10 gm on Tuesday.
On MCX and NCDEX, gold February contracts could head lower towards Rs 28,500.
Crude oil
Fears that US data on crude oil later in the day could show lower stocks are likely to drive the energy commodity higher. Brent crude for delivery in February quoted at $107.43 a barrel and US crude at $93.92.
Oils and oilseeds market is likely to be range-bound with weather concerns over Argentina crop set to ease on prospects of rain.
At the same time, China has struck deals to buy 3.5 lakh tonnes of soyabean from the US, a factor that could hold up the counter. Besides, Brazilian harvest is also putting pressure.
Soyabean, crude palm oil
Chicago Board of Trade (CBOT) soyabean contracts for March ruled at $12.72 a bushel. Crude palm oil March contracts on Bursa Malaysia Derivatives Exchange opened lower at 2,554 ringgit or $778 a tonne.
Wheat could come under pressure as the damage from the US cold snap is seen limited on the winter crop.
Wheat, corn
Prospects of the US raising last year’s corn production figures could reflect on corn. However, huge short positions built in both these commodities could limit the fall.
CBOT wheat for delivery in March quoted at $6.03 a bushel and corn for the same month at $4.25 a bushel.
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