Written by Sumit Roy  |

February 02, 2012

Market Wrap: Gold Rallies To 2-Month Highs Above $1760 As Retail Sales Rise 4.8%, NatGas Surges On Inventories

Details

Precious metals and natural gas outperform in a mixed session.

Commodities were mixed today as traders positioned themselves ahead of Friday's U.S. Nonfarm Payrolls report, which is expected to show that employers added 144K jobs in the month of January. Private payrolls (excluding government workers) are expected to have risen by 163K and the unemployment rate is anticipated to remain at 8.5 percent.

In today's economic news, the International Council of Shopping Centers reported that chain-store sales for the month of January grew by 4.8 percent year-over-year, up from 3.5 percent in December.

• Precious metals outperformed today as gold, silver, platinum and palladium all hit multimonth highs. Gold was last trading higher by $13.13, or 0.75 percent, to $1756.53/oz after reaching as high as $1761.05 earlier, the best level since Dec. 2. Silver added $0.52, or 1.55 percent, to $34.22 after reaching as high as $34.32 earlier, the best level since Nov. 16.
  
  Platinum gained $10.25, or 0.63 percent, to $1628.50, near the best level since Nov. 11, and palladium rallied by $11, or 1.58 percent, to last trade at $707.50, or the highest level since Sept. 21.
  
  "The underlying bid tone in the gold market suggests that another leg higher is only a matter of time," said Edel Tully, an analyst at UBS. "[It's] ability to hold up better than other assets would be another signal that it is recovering its safe-haven characteristics.
  
  
• For a second day, the two major crude oil benchmarks diverged, with Brent higher and WTI lower. The former was last trading up by $0.54, or 0.48 percent, to $112.10/bbl, while WTI shed $1.25, or 1.28 percent, to $96.36, near the lowest levels in six weeks.
  
  The spread between Brent and WTI is now close to $16, the highest level since mid-November of last year. The EU embargo on Iranian oil exports (pushing up Brent) and climbing oil inventories in the U.S. Midwest (pushing down WTI) may be to blame.
  
  
• Natural gas surged by $0.18, or 7.6 percent, to $2.56/mmbtu today after the EIA reported a larger-than-expected withdrawal from storage. Inventories fell by 132 bcf last week, said the agency. That's slightly more than the 129-130 bcf draw that analysts were expecting.  
  
  
• Grains were mixed today. Corn was last trading lower by $0.01, or 0.08 percent, to $6.42/bushel, while soybeans added $0.02, or 0.14 percent, to $12.17, and wheat lost $0.13, or 1.89 percent, to $6.62.
  
  "The winter remains unusually mild in the U.S., which could have a positive effect on [winter wheat] crop growth there, particularly since there has recently been sufficient rainfall in areas of cultivation," said Carsten Fritsch, an analyst at Commerzbank AG.
  
  
• Copper was lower by $0.05, or 1.38 percent, to $3.79/lb on Comex, the fourth decline in five sessions. "The recent price move was in anticipation of Chinese buying beyond the Lunar New Year. I think in the short term, the danger is that people are going to be disappointed," said Nic Brown, head of commodity research at Natixis.