Written by Sumit Roy  |

May 03, 2012

Morning Call: Gold Falls As Jobless Claims Plunge But Labor Worries Remain Ahead Of Friday; WTI Outperforms

Details

All eyes turn to Friday's nonfarm payrolls report.

IN TODAY'S HEADLINES...

A sharp decline in initial jobless claims is raising hopes that the recent slowdown in employment growth in the United States may be fleeting. The number of people filing for unemployment claims fell to 365K last week from an upwardly revised 392K the week before — the highest level of the year.

Expectations for Friday's nonfarm payrolls report have come down markedly following Wednesday's disappointing figures from payroll processor ADP. Employers are expected to have added 160K jobs in April, while the unemployment rate may hold steady at 8.2 percent.

In today's session, stocks are rising, while commodities are mostly lower amid economic worries.

• Gold is leading precious metals lower today after the European Central Bank left interest rates unchanged at 1 percent, as expected.
  
  The yellow metal was last trading lower by $12.10, or 0.73 percent, to $1641.40/oz, while silver shed $0.21, or 0.68 percent, to $30.43. Platinum fell by $12.75, or 0.82 percent, to $1549.50 and palladium lost $5.25, or 0.78 percent, to $663.63.
  Barrick Leads Miners Spending Faster Than Earnings Rise
  
  
• While both of the major crude oil benchmarks, Brent and WTI, are slightly lower today, the latter continues to outperform as the highly anticipated reversal of the Seaway pipeline at the end of this month approaches.
  
  The Brent-WTI spread is now below $13 for the first time in three months. Brent was last trading lower by $0.36, or 0.3 percent, to $117.84, while WTI lost $0.18, or 0.17 percent, to $105.04.
  
  "Interesting to see that the Brent-WTI spread narrowed overnight given that Cushing stocks increased to fresh record highs," said Richard Gorry, an analyst with JBC Energy GmbH. "It has been our view for some time, that as we see more pipeline capacity coming online from Cushing to the U.S. Gulf Coast, the spread will come under substantial pressure."
  Oil Extends Biggest Drop in Two Weeks on Jobs, Supplies
  
  
• Natural gas prices are rebounding today after falling steeply in the prior session. Prices may continue to be supported, as traders await more clarity of the trajectory of U.S. production levels. Gas was last trading up by $0.05, or 2.22 percent, to $2.30/mmbtu.
  The King Of Natural Gas Quits
  
  
• The grain complex is mixed today, as corn trades up by $0.04, or 0.58 percent, to $6.46/bushel, while soybeans trades unchanged at $14.79, and wheat adds $0.06, or 0.95 percent, to $6.12.
  
  "China could be on a buying spree," said Lynette Tan, an analyst at Phillip Futures. "They will not have enough corn to meet their demand."
  Corn Set to Gain on Speculation Over China's U.S. Buying
  
  
• Copper prices were last trading lower by $0.02, or 0.57 percent, to $3.76/lb on Comex.
  
  "There's a lot of people who are concerned that here we are in early May, which for the past two years has been a bloodbath ...The picture for Chinese and European demand will get better in the second half. But near term there are risks," said Nic Brown of Natixis.
  Copper at one-week low as global growth worries weigh
  
  

What to Watch For:

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

10:00 a.m. ET: ISM Non-Manufacturing (April)

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

Unknown Time: ICSC Chain Store Sales (April)