Written by Sumit Roy  |

February 09, 2012

Market Wrap: Gold Drops Despite More Quantitative Easing By The BOE; Copper, Oil Surge To Multimonth Highs

Details

Precious metals and grains fall, while oil and copper rise.

Commodities were mixed today after a spate of economic data from around the world. China 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, sources indicated that Greek 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.

• Precious metals fell slightly as they continue to consolidate gains from earlier this year. Gold was last trading lower by $4.25, or 0.25 percent, to $1728.95/oz, while silver edged lower by $0.10, or 0.29 percent, to $33.87. Platinum shed $5.50, or 0.33 percent, to $1658.25 and palladium edged down by $3.88, or 0.54 percent, to $710.88.
  
  
• Crude oil outperformed today as Brent hit a fresh six-month high. The benchmark was last trading up by $1.13, or 0.96 percent, to $118.33/bbl, while WTI added $1.05, or 1.06 percent, to $99.76. As we wrote in Wednesday's Crude Oil Report, the next levels of resistance for Brent lie at $120 and $127.
  
  
• Natural gas edged up by $0.04, or 1.43 percent, to $2.48/mmbtu after the EIA reported that inventories declined by 78 bcf last week, below the 83 bcf that analysts were expecting. Much warmer-than-normal temperatures are still forecast for the major consumption regions of the United States over the next two weeks.
  
  
• Grains fell after the latest supply and demand forecasts from the USDA. Corn was last trading lower by $0.07, or 1.01 percent, to $6.36/bushel, while soybeans shed $0.04, or 0.28 percent, to $12.28, and wheat lost $0.15, or 2.31 percent, to $6.46.
  
  The USDA said that it now expects corn stocks to total 801M bushels 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 that analysts were anticipating and the 870M forecast of last month. See our latest agricultural report for more analysis for the grains market.
  
  
• Copper surged to new five-month highs on Comex, as the industrial metal added $0.07, or 1.76 percent, to $3.98/lb. The rally may continue, as we wrote in our latest base metals report.