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Gold prices in the domestic spot and futures market are likely to come under pressure on Thursday as they dropped globally on bets that the US Federal Reserve could soon start cutting its stimulus package.
Though the US Federal Reserve said it would continue its $85 billion-a-month buying of bonds to keep the economy going, it could wind down soon on signs of the economy reviving. At least, resistance to cutting the programme is weakening.
US consumer prices data
Last night, the US consumer prices data showed 1.2 per cent rise for the October-September period, the lowest in six months. And a rising dollar added to the pressure on gold.
On the other hand, gold holdings in SPDR Trust, world’s largest gold exchange-traded fund, remained unchanged at 872.02 tonnes.
In the Indian context, a rising dollar could make import of commodities such as gold, crude oil and vegetable oils dearer. However, demand seems subdued despite Dhanteras and Diwali approaching.
Kharif crop arrivals
Rains in key agricultural areas seem to have delayed the arrival of the summer or kharif crops and the market fears there could be loss to crop in some places, particularly where soyabean, cotton and pulses are grown.
By mid-day in Asia, spot gold dropped to $1,338.41 an ounce and gold contracts maturing in December to $1,338.
Spot gold, gold futures
In the domestic market on Wednesday, gold for jewellery (99.5 per cent) purity ended lower at Rs 31,100 and pure gold (99.9 per cent purity) at Rs 31, 250 for 10 gm. On MCX, gold December contracts could drop below Rs 30,000.
Higher stockpiles in the US could continue to put pressure on crude oil on Thursday. Besides, easing of the geo-political tensions will aid the downtrend.
Brent crude for delivery in December was down at $109.52 a barrel and US crude for the same month at $96.53.
Soyabean arrivals
The oils and oilseeds market could continue to rule firm on rains delaying the harvest in the US and palm oil output being affected by the weather in Malaysia and Indonesia. Rains delaying the arrivals of soyabean and other oilseeds will also help prices rally in India.
Chicago Board of Trade soyabean contracts maturing in January were up at $12.75 a bushel. Crude palm oil contracts for delivery in January on Bursa Malaysia Derivatives Exchange were up at 2,551 ringgit or $808 a tonne.
Wheat, corn prices
Wheat prices could come under pressure after the Indian Government approved to cut the floor price for export to $260 a tonne. But given the higher prices in the domestic market, one has to see how much of wheat will find its way abroad.
Though India has pegged its crop at over 92 million tonnes this year, the trade is of the view that it is far lower. However, over 36 million tonnes of stocks with the Food Corporation of India could prove handy.
Corn, on the other hand, could come under pressure due to wheat’s decline but imports by South Korea and funds having to cover their short positions will provide support.
CBOT wheat for delivery in January dropped to $6.73 a bushel and corn for delivery the same month at $4.31 a bushel.
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