Written by Sumit Roy  |

February 09, 2012

Morning Call: Gold Steadies As China Inflation Picks Up, UK Expands QE Program; Brent Tops $118

Details

Brent outperforms after a spate of economic data.

IN TODAY'S HEADLINES...

• Commodities are mostly higher today despite the release of faster-than-expected inflation figures for China. The country reported that its consumer price index rose by 4.5 percent year-over-year in January, a higher rate than the 4 percent that was expected, and up from 4.1 percent in December.
  
  Meanwhile, Greek sources indicated that lawmakers and the EU and IMF have reached a deal, ensuring that the country will receive its second bailout, staving off a default for now.
  
  In the U.K., as expected, the Bank of England expanded its quantitative easing (bond buying) program by 50 billion pounds, to 325 billion.
  
  In the United States, initial jobless claims fell to 358K last week, near the lowest level since early 2008.
  Chinese inflation picks up
  
  
• Precious metals are on either side of the unchanged mark as they continue to consolidate gains from earlier this year. Gold was last trading higher by $1.20, or 0.07 percent, to $1734.40/oz, while silver edged lower by $0.05, or 0.13 percent, to $34.02. Platinum shed $0.75, or 0.05 percent, to $1663 and palladium edged up by $0.75, or 0.1 percent, to $715.50.
  Precious Metals Monitor: Minor Gold Correction Ends, Rally To $1800 Resumes
  

• Crude oil is outperforming today as Brent hits a fresh six-month high. The benchmark was last trading up by $1.24, or 1.06 percent, to $118.44/bbl, while WTI added $1, or 1.01 percent, to $99.71. As we wrote in Wednesday's Crude Oil Report, the next levels of resistance for Brent lie at $120 and $127.
  Crude Oil Report: Brent Unfazed As US Demand Hits New 13-Year Low, Test Of $120 In The Cards
  
  
• Natural gas is edging up by $0.03, or 1.18 percent, to $2.48/mmbtu as prices continue to consolidate in a narrow range after plunging during much of January. Much warmer-than-normal temperatures are still forecast for the major consumption regions of the United States over the next two weeks.
  Facing Frack Hysteria
  
  
• A fairly neutral batch of supply and demand figures from the USDA may have little impact on grain prices today, though the data were supportive of wheat. The department said that it now expects corn stocks to total 801M bushel ahead of the next harvest, close to the 800M that analysts had expected, but down from 846M last month.
  
  Soybeans stocks may total 275M bushels, close to the 270M analysts expected and equal to the 275M forecast of last month. Wheat stocks may total 845M bushels, below the 860M analysts were anticipating and the 870M forecast of last month.
  Corn slips, market awaits USDA crop estimates
  

• Copper is inching up by $0.01, or 0.28 percent, to $3.92/lb on Comex, just below recent 4 ½ month highs. "The China inflation data [is a weight] on prices and putting some brakes on a more pronounced upward trend at the moment," said Daniel Briesemann, an analyst at Commerzbank. "If further data points in the same direction then I think expectations regarding a tightening of monetary policy could gain the upper hand..."
  Copper rises on stronger euro, near year high
  
  
  

What to Watch For:

8:30 a.m. EST: Initial Jobless Claims

8:30 a.m. EST: USDA World Agricultural Supply And Demand Estimates Report

10:30 a.m. EST: Weekly Natural Gas Storage Report