Gold seen declining, wheat likely to remain firm

WEEKLY COMMODITIES OUTLOOK

Gold: Following low physical demand, overseas as well as domestic, and poor sentiments, prices are likely to fall to $450-452 an ounce,said traders and analysts. On Monday, at 1625 IST, overseas spot gold traded at $457.91 an ounce after the previous close at $456.8.

The physical demand from the Asian countries seemed to have fallen as the imports had been very high during the previous quarter. Also high prices may have deterred the Indian consumers.

"Gold went through a bout of profit booking last week that saw it losing over $15 per ounce. The strength in the greenback, reinforced by the hike in short-term benchmark interest rates by the US Federal Reserve, had compelled gold to lose considerable grounds," said V Sivaramakrishnan, an analyst with Karvy Commodities.

Overseas, funds are seen taking profit at current levels following which, gold prices are falling. The continued buildup, in speculative long positions, make the gold prices heavy on the top and this led to the funds' selling.

Profit booking was obvious from the fact that the speculative net long positions which stand at 0.131 million, continued to decline for the fourth consecutive week after hitting a record high level of 0.177 million.

"Though there seems to be a negative mood as more funds may liquidate positions, we expect buying to come in at these low levels. US Dollar may come under pressure this week as the trade deficits data to be released on Thursday could show further widening," Sivaramakrishnan added.

Wheat: Prices are likely to remain firm at current levels for a while. High levels of expected festive demand did not materialise and the tight supply situation prevails.

The New Delhi market did witness demand from south India though it was not as last year's, because of tighter margins. "Even regular buyers are turning to the original Uttar Pradesh mandis like Kanpur," said a Delhi-based trader.

Wheat spot prices (ex-Delhi) peaked at Rs 835 per 100 kg.

"The ongoing rally on the futures is speculative in nature and will soon move downwards," said an analyst. In the current week, Ncdex November wheat contract is likely to trade between Rs 830-838 per 100 kg and December contract between Rs 852 and Rs 858 per 100 kg.

Chana (chick pea): Current tight supply situation along with weak demand is seen keeping prices supported at current levels during the week. "In most parts of the country, demand for a month now, despite festive season has been weak following high prices," said a Mumbai-based analyst.

A section of the traders are hopeful that demand will rise now and thus, push prices up. "Demand is seen picking up in Haryana, Gujarat, West Bengal and this may push up prices," said a Delhi-based trader.

Market players expect Ncdex November contracts supported at current levels but rising over the next fortnight to Rs 2,150 per 100 kilogram level.