Written by Sumit Roy  |

November 16, 2011

Morning Call: Gold, Oil, Copper Fall As ECB Tries To Contain Spiking Italian And Spanish Interest Rates

Details

The relentless sovereign debt crisis in Europe continues.

IN TODAY'S HEADLINES ...

• News flow is light this morning as all eyes stay fixed on the sovereign debt crisis in the eurozone. Most commodities and stocks are lower. Over the past couple of weeks, risk asset prices have been choppy, as Europe woes offset an improving economic outlook in the United States.
  
  Italian and Spanish 10-year bond yields were last trading unchanged and up 3 basis points, respectively, to 7.07 percent and 6.37 percent. Sources say that the European Central Bank stepped into the market aggressively to purchase bonds earlier today.
  
  Meanwhile, the U.S. Dollar Index is advancing 0.3 percent to 78.10.
  European Central Bank steps in to counter bond rout
  
  
• Gold is slightly lower today as prices continue to consolidate in the upper $1700s region. "The eurozone crisis isn't going to carry on like this for another three months, it will come to some resolution, but it's hard to know what it means for gold," said Matthew Turner, an analyst with Mitsubishi. "It could be bullish if the ECB starts money-printing, but it could be bearish if there is another flight to cash."
  
  Gold was last trading down by $7.21, or 0.41 percent, to $1773.61/oz, while silver lost $0.20, or 0.59 percent, to $34.34. Platinum shed $9.63, or 0.59 percent, to $1639.38 and palladium fell by $9.75, or 1.46 percent, to $656.25.
  Gold falls as euro succumbs to debt market pressure
  
  
• Prices for crude oil are slightly lower ahead of the Energy Information Administration's Weekly Petroleum Status Report. "For quite a long time the oil price has correlated well with events in the sovereign debt crisis," said Torbjoern Kjus, an analyst at DnB NOR. "I would not be surprised to see prices falling back more. We are risking a banking crisis."
  
  The less-authoritative API report showed that crude oil stocks rose by 1.3 mmbbl last week, while those for gasoline and distillates fell 2.9 mmbbl and 2.6 mmbbl, respectively.
  
  Brent was last trading lower by $0.79, or 0.7 percent, to $111.60/bbl, while WTI fell $0.30, or 0.3 percent, to $99.07.
  Crude Oil Slides From Near Its Three-Month High as Euro, Equities Retreat
  
  
• The grain complex is down across the board, with corn down $0.05, or 0.74 percent, to $6.41/bushel, while soybeans fall by $0.07, or 0.6 percent, to $11.93, and wheat declines by $0.05, or 0.75 percent, to $6.28.
  
  "Soybeans have been reasonably well supported but they are down today and everything is a little bit weaker, which is not surprising given the stronger dollar," said Adam Davis, a senior analyst at Merricks Capital. "It is hard to find a bullish story in wheat at this point or until pressure from the Black Sea comes off next year."
  Soy drops from 1-week top on eurozone fears, wheat down
  
  
• Eurozone worries are pushing copper down $0.07, or 2 percent, to $3.43/lb on COMEX. "We consider industrial metals to be the riskiest of all commodity sectors," said analysts at Credit Suisse.
  Eurozone debt concerns weigh on copper
  
  

What to Watch for:

8:30 a.m. EST: Consumer Price Index (October)

9:15 a.m. EST: Industrial Production (October)

10:30 a.m. EST: Weekly Petroleum Status Report