Written by Sumit Roy  |

February 17, 2012

Morning Call: Gold Higher As Hedge Fund Manager John Paulson Says Buy, NatGas Surges For 2nd Day

Details

The bias in commodity markets remains higher.

IN TODAY'S HEADLINES...

News flow is light today, but the bias in financial markets remains higher as stocks hover near nine-month highs. In turn, commodities are also trending to multimonth highs in many cases.

• Precious metals are modestly higher today. The sector has been largely flat this week as traders looked to other commodities to take advantage of an improving economic outlook. Safe-haven demand also ebbed as eurozone sovereign debt concerns receded.
  
  Nevertheless, long-term inflation concerns continue to support gold in particular. "By the time inflation becomes evident, gold will have moved, which implies that now is the time to build a position," said billionaire hedge fund manager John Paulson.
  
  The yellow metal was last trading up by $4.49, or 0.26 percent, to $1732.65/oz, while silver added $0.07, or 0.2 percent, to $33.56. Platinum gained $16.25, or 1 percent, to $1640.75, and palladium inched lower by $0.75, or 0.11 percent, to $695.50.
  Gold Traders Get More Bullish as Billionaire Paulson Says Buy
  
  
• Crude oil is mixed today as Brent pauses after reaching the best level in eight months overnight. Prices got as high as $120.70/bbl, but were last trading lower by $0.16, or 0.13 percent, to $119.95. WTI gained $0.51, or 0.5 percent, to $102.82.
  
  "Most blame geopolitics for the latest spike, and we don't quibble with that," said Frederic Neumann, co-head for Asian economic research at a bank in Hong Kong. "But fundamentally, Asia's huge appetite for crude is providing the backdrop."
  Crude Oil Set for Biggest Weekly Gain This Year on US Economy, Greek Aid
  
  
• Natural gas prices are surging for a second day, up $0.11, or 4.21 percent, to $2.68/mmbtu. "While low Nymex natural-gas prices are motivating Powder River basin coal-to-gas substitution, power generation demand for natural gas has also increased in other regions of the country, resulting in very strong overall demand from power generators so far this year," said David Greely, head of energy research at Goldman Sachs.
  US Gas Low Enough to Boost Switch From Coal, Goldman Says
  
  
• The grain complex is higher, with soybeans at a four-month high amid dry-weather-related concerns in South America. Corn was last trading up by $0.05, or 0.79 percent, to $6.41/bushel, while soybeans added $0.12, or 0.91 percent, to $12.70, and wheat gained $0.09, or 1.39 percent, to $6.38.
  Wheat Advances for Second Day as Egypt Buys From US; Corn, Soybeans Gain
  
  
• Copper is seeing little movement on Comex, as prices edge higher by 0.12 percent to $3.80. "If you take a look at China you can see a continuous build-up in inventory levels which shows that demand is cooling down a little bit in China," said Daniel Briesemann, an analyst at Commerzbank.
  Copper up on Greek bailout hopes

What to Watch For:

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

1:00 p.m. EST: Baker Hughes Rig Count