Written by Sumit Roy  |

May 22, 2012

Morning Call: Gold Sinks For 2nd Day After $1600 Resistance, NatGas Falls As Traders Speculate Rally Over

Details

Commodities are mostly lower today.

Commodities are mostly lower today, while stocks are up for a second session amid light news flow. Spanish 10-year bond yields — currently seen as the best gauge of eurozone sovereign debt fears — were last trading lower by 18 basis points to 6.09 percent. The U.S. Dollar Index rose by 0.15 percent to 81.21.

• Gold is leading precious metals lower today, as traders take profits following the recent technical-driven rally from $1527 to $1599. The yellow metal was last trading down by $12.30, or 0.77 percent, to $1580.78/oz, while silver shed $0.30, or 1.05 percent, to $28.17.
  
  Platinum lost $5.25, or 0.36 percent, and palladium fell by $2.75, or 0.45 percent, to $611.50.
  
  "Having failed at $1,600 yesterday, the market has looked for the direction of least resistance and that is currently down," said Ole Hansen, a senior manager at Saxo Bank.
  Gold falls as euro stumbles ahead of EU summit
  
  
• Crude oil prices are little changed, as traders await more clues on the health of the global economy. Brent was last trading higher by $0.21, or 0.19 percent, to $109.02, while WTI shed $0.22, or 0.24 percent, to $92.35.
  
  "We've still got problems in the Middle East," Jonathan Barratt, chief executive of Barratt's Bulletin, said in an interview with Bloomberg. "I can start to see a little level of optimism creeping into the market, and that should support the price. We are at the lower end, and I think we're heading back through to $100 a barrel [for WTI]," he said.
  Oil Trades Near Three-Day High on Economy, Iran Sanctions
  
  
• Natural gas was last trading down by $0.02, or 0.73 percent, to $2.59/mmbtu, its second loss since bouncing off technical resistance near $2.75.
  
  "This has been a decent rally, but it's come to its peak," said Dominick Chirichella, an analyst at Energy Management Institute, a commodities-market consultancy.
  
  "The next big move in the [gas] market is going to be determined by how the market perceives utilities are going to manage gas-to-coal switching," said Brison Bickerton, managing director at Greenwich, Conn.-based Freepoint Commodities, a trading house.
  
  As summer draws closer, weather will become increasingly important as a driver of gas prices. The latest forecasts are calling for warmer-than-normal temperatures across the United States, which is supportive of demand.
  Investors See Cap on Natural Gas Prices
  
  
• The wheat-driven rally in the grain complex is taking a breather today. Corn was last trading down by $0.05, or 0.79 percent, to $6.28/bushel, while soybeans fell by $0.01, or 0.07 percent, to $14.12 and wheat shed $0.11, or 1.6 percent, to $6.93.
  Eastern Australia Needs Rain to Boost Wheat Production
  
  
• Copper was last trading lower by $0.01, or 0.37 percent, to $3.49/lb on Comex, as the industrial metal trades in line with other commodities.
  Copper falls as dollar firms, debt crisis weighs
  
  

What to Watch For:

10:00 a.m. ET: Existing Home Sales (April)

4:30 p.m. ET: API Statistical Bulletin