Written by Sumit Roy  |

April 23, 2012

Market Wrap: Silver Tumbles To 3-Month Low On Demand Concerns After Dismal Europe Data, NatGas Rebounds

Details

Sentiment in financial markets sours amid dismal data on Europe.

Economic slowdown worries re-emerged as a driver of financial markets today, sending commodities and stocks broadly lower. Europe was the focus, as the latest data painted a dismal picture of growth in the region.

Manufacturing in Germany contracted at the fastest pace since July 2009, according to Markit's PMI gauge, which fell from 48.4 to 46.3 in April.

Meanwhile, a report from the Bank of Spain showed that the country's economy contracted for a second consecutive quarter after the first three months of this year. Output fell by 0.4 percent after falling 0.3 percent in the fourth quarter of 2011, putting the country in recession territory.

Yields on Spanish 10-year bonds rose above 6 percent, a level seen as unsustainable over the long term.

• Today's negative news flow did not encourage safe-haven buying in precious metals; the sector fell along with other commodities and stocks, with silver and platinum even hitting multimonth lows amid worries that a slowdown in growth could dampen industrial demand for the metals.
  
  Gold was last trading lower by $8.13, or 0.49 percent, to $1634.80, while silver shed $0.98, or 3.09 percent, to $30.72 — the lowest level since Jan. 20. Platinum lost $22.75, or 1.44 percent, to $1557.75 — a three-month low, and palladium shed $4.50, or 0.67 percent, to $671.
  
  "There just hasn't been much interest in gold these days, and direction comes from all over including the dollar and stock markets," said Huang Mingchen, a trader at Wonder Futures Co. "We'll probably get another week of muted trading as markets digest the IMF meeting over the weekend, and before the Fed policy statement."
  
  
• Today's broad-based selling pressured crude oil prices, as Brent declined by $0.51, or 0.43 percent, to $118.25, while WTI lost $0.27, or 0.26 percent, to $102.78. According to Bloomberg, China's demand for crude oil fell to 9.51 mmbbl/d in March, the lowest level since October.
  
  "Negative data from China is contributing to oil's weakness today," said Christopher Bellew, a senior broker at Jefferies Bache. "Brent has slipped into a lower range, with the bottom around last week's low at $116.70, and resistance at $120.50."
  
  
• Natural gas prices rebounded today from last week's 10-year low of $1.902, as some traders speculated that prices may be oversold. The fuel was last trading up by $0.06, or 2.91 percent, to $1.983/mmbtu.
  
  
• The grain complex was mixed today, with corn last trading higher by $0.08, or 0.52 percent, to $6.21, while soybeans shed $0.08, or 0.52 percent, to $14.39 and wheat edged up by $0.09, or 1.38 percent, to $6.24.
  
  "The dollar's up a bit at the moment, energy's off a bit, so I wouldn't read too much into the weakness of the market, especially after a fairly strong move last Friday," said Erin FitzPatrick, an analyst with Rabobank.
  
  
• Copper prices tumbled by $0.07, or 1.83 percent, to $3.63/lb on Comex.
  
  "Although there are signs of cautious buying emerging in China, it's still too early to call a bottom because fears in the eurozone are so strong it pays to wait," said Eugen Weinberg, an analyst at Commerzbank.