Written by Sumit Roy  |

January 10, 2012

Morning Call: Gold ($1638), Oil Surge As Earnings Season Kicks Off; China Import Growth Hits 2-Year Low

Details

It's a positive session in financial markets.

IN TODAY'S HEADLINES ...

• Commodities and stocks are rallying strongly today after aluminum giant Alcoa kicked off the earnings season with better-than-expected results. Weak data in China did little to dissuade traders from buying, as many anticipate that the country's government will reinvigorate growth by loosening monetary policy.
  
  China's trade balance surplus for December came in at $16.52 billion, well above expectations that were calling for $8.8 billion. Exports grew by 13.4 percent year-over-year in the month, which was a 10-month low, but equal to expectations.
  
  Imports, however, fell well short of expectations, as they rose by 11.8 percent, below the 18 percent that was anticipated. That's the slowest growth in over two years.
  
  In Europe, Italian and Spanish 10-year bond yields fell by 1 basis point and 3 basis points, respectively, to 7.15 percent and 5.53 percent.
  
  The U.S. Dollar Index fell slightly to 80.84, a loss of 0.26 percent as the EUR/USD exchange rate rose to 1.2809, a gain of 0.34 percent.
  China Trade Growth Slows to 2-Year Lows in December
  
  
• Precious metals are surging today as the rally that began at the beginning of the year continues. "A big part of the weakness into the end of the year was people taking profits and liquidity being a bit lower," said Macquarie analyst Hayden Atkins. "I would expect that to unwind, and maybe that's why we're seeking stronger gold even when the euro is tending to weaken. You don't have that length there anymore."
  
  Gold was last trading higher by $26.68, or 1.66 percent, to $1638.25/oz, while silver jumped $1.09, or 3.74 percent, to $30.10. Platinum surged $44, or 3.09 percent, to $1470, and palladium added $25, or 4.06 percent, to $640.50.
  Gold climbs 1 percent as euro firms; platinum rises
  
  
• Crude oil is bouncing amid today's broader rally in commodities and as Iranian geopolitical concerns keep prices supported. Brent was last trading higher by $1.31, or 1.16 percent, to $113.76/bbl, while WTI gained $1.96, or 1.91 percent, to $103.25.
  
  "Iran is still the main reason why WTI surpassed the $100 mark," said Hannes Loacker, an analyst at Raiffeisen AG. "If there is military escalation, though I don't think this will happen, Iranian oil exports will disappear from the global market. If there's no intensification, the risk premium will be priced out in the next couple of months."
  Oil Advances for First Day in Four on Iranian Dispute, Euro Debt Meeting
  
  
• Grains are little changed today after outperforming in the prior session. Traders await Thursday's World Agriculture Supply and Demand Estimates report from the USDA. "We have had a run up in prices, which was an adjustment to hotter and drier weather in Argentina. Now it is a wait for USDA report for price direction," said Adam Davis, a senior commodity analyst at Merricks Capital.
  
  Corn was last trading fractionally lower to $6.52/bushel, a loss of 0.08 percent. Soybeans inched down by $0.01, or 0.04 percent, to $12.25, and wheat lost $0.02, or 0.35 percent, to $6.40.
  Grains await USDA report
  
  
• Copper is performing well today after underperforming relative to other commodities in recent sessions. The industrial metal was last trading higher by $0.08, or 2.33 percent, to $3.50/lb on Comex.  
  
  Imports of Copper by China rose to a record 508,942 metric tons in December, according to the latest data. "Easing credit conditions could be driving greater willingness to restock and the arbitrage window opened up in the latter part of 2011," said Nick Trevethan, senior commodities strategist at ANZ Research.
  Copper gains as China data supports; Europe eyed
  
  
  

What to Watch for:

No notable releases