Gold is likely to rule range-bound at the domestic spot and futures market with the market topping $1,400 an ounce globally and then paring gains.
A 13 per cent drop in sales of new homes in the US in July and speculation that the US stimulus programme could continue are the main drivers for gold now.
The other push could come from money managers and hedge funds raising their bullish bets on gold by 29 per cent to 73,216. Bearish bets fell for the second consecutive week.
Things are looking up for gold in the short-term what with India’s summer crops harvest due in the next couple of days. The summer or kharif crop could turn out to be record on the heels of a beneficial monsoon that has seen 14 per cent excess rainfall.
A good crop results in higher rural income and in turn, spending.
Rupee Vs dollar
If rupee continues to gain as it did during week-end, then the rise in gold could be tempered. Any rise in the rupee against the dollar will make import of gold, vegetable oils and crude oil cheaper.
However, it remains to be seen if gold can hold gains since it has dropped on hitting $1,400 despite reports of supply woes in South Africa.
Spot gold, gold futures
In early Asian trade, spot gold fell to $1,394.20 an ounce and gold futures maturing in December to $1,393.80 an ounce.
In the domestic market on Saturday, gold for jewellery (99.5 per cent purity) ended higher at Rs 31,790 and pure gold (99.9 per cent purity) at Rs 31,945 for 10 gm.
On MCX, October gold futures could trade below Rs 32,500.
Crude oil prices
Crude oil is set to gain on impressions that the US stimulus package that sees $85 billion being pumped into the economy every month will continue. Lower stockpiles in the US are also boosting the counter.
Brent crude futures maturing in October rose to $111.82 a barrel and West Texas Intermediate crude contracts for the same month to $106.96.
Oils, oilseeds
The oils and oilseeds complex could gain following reports of dry weather in the US Midwest that could play spoilsport with soyabean crop prospects.
Though the US Department of Agriculture has projected an eight per cent rise in production, the Professional Farmers of America are pegging it a little lower.
This is because soyabean plantings got delayed and cool weather affected the growth. Prospects of frost affecting the crop are also driving the prices higher, while outlook for the next week is aiding the uptrend.
Soyabean, crude palm oil
Chicago Board of Trade soyabean for delivery in November rose to $13.75 a bushel in early Asian trade. On Bursa Malaysia Derivatives Exchange, crude palm oil contracts maturing in November opened sharply higher at 2,432 ringgit or $736.75 a tonne.
A higher production of summer oilseeds in India could, however, temper the rise.
Output estimates
The grains complex is also set to gain as the Professional Farmers have forecast a lower than initial production estimates for corn (Industrial maize).
Corn futures maturing in December rose to $4.87 a bushel and wheat, gaining in sympathy, increased to $6.55 for December delivery.