Gold set to pare its gains for the week

Chennai-India  (Jan 31)  In less than 24 hours, the gold market has undergone a change that prices in the domestic spot and futures market are set to come under pressure on Friday. The transformation has been such that the precious metal could end up giving up all that it gained this week.

During this period, equities around the world have gained, attracting investors to stock markets.

US GDP growth

Overnight, data from the US showed that its GDP grew 3.2 per cent during October-December in line with general expectations. Chinese buying, too, seems to have slowed in view of New Year holidays.

The lone bright spot for the precious metal is a marginal rise in holdings in gold-backed exchange-traded funds. Holdings in SPDR Trust, the world’s biggest gold exchange-traded fund, increased to 793.16 tonnes.

In the domestic market, currency movement could have some influence as a strong dollar against the rupee makes import of gold, crude oil and vegetable oils costlier.

Spot gold, gold futures

By mid-day in Asia, spot gold fell to $1,242.75 an ounce, while gold futures maturing for delivery in April slid to $1,242.50.

On NCDEX, spot gold ended at ₹ 29,800 on Friday. MCX and NCDEX gold futures maturing for delivery in February are likely to head lower towards ₹ 29,500.

Higher crude oil demand

Expansion in developed countries means higher demand for commodities such as crude oil. Besides, the current cold spell in the US is resulting in higher consumption. In all, crude oil prices are set to rule firm.

Brent crude for delivery in March ruled firm at $107.89 a barrel and US crude for the same month at $98.09.