Gold prices in the domestic spot and futures market are likely to come under pressure as investors are getting nervous over the US Federal Reserve move to wind down its $85-billion-a-month stimulus programme.
The US Federal Reserve is meeting on Tuesday and Wednesday and the meeting could spell out its plans on when it could begin tapering the stimulus programme. If the tapering is likely to begin from March, then there could be some relief to the pressure on the precious metal.
While holdings in gold exchange-traded funds are dropping, data from Commodities Futures Trading Commission of the US showed that bullish bets on gold increased last week.
Fed policy meet
A key to what lies in store at the US Fed Reserve meeting could be revealed by Fed Chairman Ben Bernanke’s speech at the Federal Reserve Centennial Commemoration later tonight.
In the Indian context, any rise in the dollar against the rupee could make import of gold, crude oil and vegetable oils costlier.
Curb on gold import
While reports say that the Government could ease the curbs on gold import as the current account deficit is falling, Finance Minister P. Chidambaram, speaking in Mumbai on Saturday, had said that Indians should curb their thirst for gold.
In early Asian trade, spot gold was down at $1,236.36 an ounce and gold futures maturing for delivery at $1,235.80.
NCDEX spot gold was quoted at Rs 30,300 for 10 gm during the week-end. On MCX and NCDEX, gold February futures could head towards Rs 29,000.
Crude oil may rise
Crude oil, particularly Brent, is likely to rise as rebels in Libya have refused to hand over key oil ports. Besides, drop in stockpiles and economic growth could drive the complex higher.
Brent crude edged up in early Asian trade to $109.50 a barrel and US crude to $96.53.
Fears over China cancelling US cargoes and favourable weather for South American soyabean are likely to drag the oils and oilseeds market. Winter curbing the demand for palm oil is also set to play a role in depressing the prices.
Soyabean, crude palm oil
Chicago Board of Trade soyabean fell to $13.12 a bushel for delivery in March. Crude palm oil for delivery in March on Bursa Malaysia Derivatives Exchange was up at 2,571 ringgit or $795 a tonne.
Despite threat of heat affecting corn (industrial maize) crop in Argentina, it may head south on projections of record crop and carryover stocks.
Wheat, corn futures
With snowfall seen adequate for wheat, it is also under pressure. Threat from cold wave is also receding.
CBOT wheat for delivery in March dropped to $6.26 a bushel and corn for delivery the same month to $4.23 a bushel.