Strong dollar, festival buying may cap gold’s fall

OUR BUREAU Chennai | Updated on March 12, 2018 Published on October 10, 2012

In addition to the strong dollar, oncoming Dussehra, Diwali and marriage season can boost the gold price in domestic market   -  The Hindu

A $10 an ounce fall in gold price in the global market is likely to influence the yellow metal’s price in the domestic market. But a strong dollar and festival buying could hinder any downward movement.

With investors seeing the US greenback as a better hedge against Europe’s economic woes and growth outlook bleak, gold dropped to $1,764.70 an ounce in the US. In Singapore, it opened a little lower at $1,762.65.

But any drop in the rupee will make imports costlier and therefore, a strong dollar can boost gold prices in the domestic market. In additional, the oncoming Dussehra, Diwali and marriage season is seeing buying. The ongoing kharif harvest, though lower, is another factor that could put upward pressure on gold.

In Mumbai, gold of 99.5 per cent purity used for jewellery had closed at Rs 31,500 for 10 gm on Tuesday.

Most of the agricultural commodities had gained on Tuesday on value buying. But with the domestic market reflecting the global market trend, the trend is likely to change. However, a weak rupee that makes imports costlier and exports cheaper could determine the direction that commodities such as industrial maize (corn) and edible oils take.

Maize is exported and any weakening will benefit exporters. On the Chicago Board of Trade (CBOT), corn for December delivery dropped to $7.41 a bushel.

Similarly, wheat which India is trying to export as its warehouses are bulging with stocks could gain. On CBOT, wheat for December delivery was unchanged at $8.64-1/2 a bushel.

On the edible oils front, reports that Indian importers could have bought more palm oil in view of lower Malaysian prices could cast a bearish effect. It is likely to be aided by soyabean for November delivery dropping on CBOT to $15.42-3/4 a bushel. Palm oil December futures had closed 3 per cent higher on Bursa Malaysia Derivative Exchange on Tuesday at 2,438 rinngit. It has come long way from 2,330 ringgit, a three-year low hit last week.

Rupee again is likely to cap sharp fall in the counter.

Crude oil is likely to be range-bound as also natural rubber in the domestic market.

Crude for November delivery on the NYMEX declined to $91.89 a barrel early on Wednesday morning, after gaining $3 on Tuesday.

Published on October 10, 2012
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