Written by Sumit Roy  |

May 24, 2012

Morning Call: NatGas Hovers Under 3-Month High Resistance Ahead Of Inventory Report, Gold Eyes Currencies

Details

Commodities rise modestly in today's session.

Commodities are up modestly today on bargain buying, but economic worries remain at the forefront of traders' minds. In today's macro data, durable goods orders in the U.S. rose by 0.2 percent in April, matching expectations. Meanwhile, the number of people filing for unemployment claims was steady, near 370K.

Spanish 10-year bond yields — currently seen as the best gauge of eurozone sovereign debt fears — fell by 2 basis points to 6.18 percent. The U.S. Dollar Index was last trading unchanged at 82.10 — near the highest levels in 20 months.

• Gold was last trading up by $3.47, or 0.22 percent, to $1564.92/oz, while silver added $0.34, or 1.21 percent, to $28.14. Platinum gained $2.75, or 0.19 percent, to $1428 and palladium rallied by $4, or 0.67 percent, to $596.75.
  
  "The euro fell to levels not seen since February 2010, when gold was trading around $1,100 an ounce. If gold moved entirely in lockstep with EUR/USD movements, we would expect the bullion market to be much closer to the $1,100/oz level," HSBC said.
  
  "That gold now is $460/oz higher, at $1,560 an ounce, implies it may have some other underlying supportive factors influencing prices."
  Gold edges up as euro cuts losses
  
  
• Crude oil is rebounding from multimonth lows today, but price action remains weak amid economic concerns and a waning geopolitical risk premium following Iran's agreement with the IAEA to allow closer inspections of its nuclear facilities earlier this week.
  
  Brent was last trading higher by $0.37, or 0.35 percent, to $105.93, while WTI added $0.62, or 0.69 percent, to $90.52.
  
  "The number one issue is the uncertainty and financial instability a chaotic Greek exit from the euro would cause," said Victor Shum, an energy analyst with consultant Purvin & Gertz. "However, barring such an exit, crude demand should improve over the summer and prices should strengthen moderately."
  Oil up to near $92 on snag in Iran nuclear talks
  
  
• Natural gas is holding just under three-month highs ahead of the EIA's weekly storage report. Analysts expect that operators injected 76 to 78 bcf into inventories last week, below the 101 bcf of last year and the 97 bcf five-year average.
  
  Gas was last trading at $2.72/mmbtu, down $0.02, or 0.62 percent.
  European Fracking Bans Open Market for U.S. Gas Exports
  
  
• The grain complex is higher today, as corn rises by $0.03, or 0.5 percent, to $6.07/bushel, while soybeans gains $0.15, or 1.08 percent, to $13.77 and wheat advances $0.07, or 0.98 percent, to $6.72.
  
  "In 2010, everyone was talking about dryness in Russia even in May, but no one was paying attention," said Chris Gadd, an analyst at Macquarie Group Ltd. in London. "Because you've had the history of 2010, people are going to the other extreme and overreacting a little. If weather conditions deteriorate further, [wheat] production estimates could go a lot lower."
  Wheat Fields Parched by Drought From U.S. to Russia
  
  
• Copper prices are rebounding from the lowest levels since January. The industrial metal was last trading to the upside by $0.03, or 0.85 percent, to $3.43/lb.
  
  "Prices of copper have come off quite heavily in recent weeks so there might be some sense that maybe it was an overreaction," said Alexandra Knight, an economist with National Australia Bank. "From my perspective Greece will ultimately stay in the euro zone as there will be a lot of resistance to letting it exit."
  Copper rises from 4-1/2 month low, EU crisis weighs
  
  

What to Watch For:

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

8:30 a.m. ET: Durable Goods Orders (April)

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