Written by Sumit Roy  |

June 13, 2012

Morning Call: Gold ($1611) Steadies, WTI Slips On Retail Sales; Spanish & Italian Yields Stay High Ahead Of Auction

Details

It's a mixed session for commodities.

Light news flow is keeping commodities narrowly mixed today, but eurozone concerns remain in focus. The two key players at this stage are Greece, with its parliamentary elections coming up this weekend, and Spain, which is facing a banking crisis.

The Spanish 10-year bond yield—currently seen as the best gauge of eurozone sovereign debt fears—was last trading higher by 1 basis point to 6.71 percent, close to Tuesday's euro-era record of 6.83 percent.

The yield on equivalent Italian bonds, which is also worth watching now that it has crossed the key 6 percent threshold, was last trading unchanged at 6.17 percent. Italy will auction as much as 4.5 billion euros worth of long-term debt on Thursday.

In economic news, U.S. retail sales fell by 0.2 percent in May, matching expectations. Excluding autos, retail sales fell by 0.4 percent, worse than the expectations which were calling for no change.

The U.S. Dollar Index was last trading at 82.28, a loss of 0.17 percent.

• The precious metals sector is little changed today, as gold edges up by $1.07, or 0.07 percent, to $1610.88/oz, while silver sheds $0.18, or 0.63 percent, to $28.79.
  
  Platinum was last trading down by $1.75, or 0.12 percent, to $1453 and palladium lost $5.50, or 0.88 percent, to $619.50.
  
  "[Federal Reserve Chairman Ben] Bernanke, in comments made to the Congress committee last week, seemed to be intimating that QE was off the table," said Citigroup analyst David Wilson. "But I wonder [whether] if Europe continues to drag, the likelihood of QE continues to grow," he added. "That in itself should be supportive for gold."
  Gold holds near $1610
  
  
• Crude oil prices are mixed ahead of the EIA's Weekly Petroleum Status Report. The less-authoritative API figures showed that crude inventories rose by 1.6 mmbbl, gasoline inventories fell by 0.9 mmbbl, and distillate inventories rose by 0.5 mmbbl last week.
  
  "There's still an overhang in crude inventories in the U.S. and stocks have built globally in the first half of the year," said Gareth Lewis-Davies, an analyst at BNP Paribas. "The market is being affected, as with other commodities, by swings in trader risk aversion.
  
  Brent was last trading at $97.17, a gain of $0.03, or 0.03 percent, while WTI shed $0.58, or 0.7 percent, to $82.74.
  Oil Fluctuates in New York as IEA Sees Improved Global Supplies
  
  
• Natural gas prices were last trading at $2.19/mmbtu, a loss of $0.05, or 2.02 percent.
  US coal use falling fast; utilities switch to gas
  
  
• The grain complex is narrowly mixed, as corn sheds $0.05, or 0.77 percent, to $5.80/bushel, while soybeans falls by $0.07, or 0.45 percent, to $14.29 and wheat edges up by $0.02, or 0.28 percent, to $6.18.
  
  The Australian Bureau of Agricultural and Resource Economics sand Sciences cut its forecast for Australian wheat production by 6.2 percent today. Output may total 24.1 million metric tons in the 2012/2013 season, down from the 25.7 million projected in March.
  Australian Cuts Wheat Production Forecast on Dry Weather
  
  
• Copper was last trading at $3.34/lb on Comex, a gain of $0.01, or 0.16 percent.
  
  "Copper prices are stuck in a narrow range, reflecting caution and directionless trading. Investors are encouraged by equities' rise, but are wary over the euro zone problems, which have so many implications for the world economy," said Li Rong, an analyst at Great Wall Futures.
  Copper edges up, but Europe fears weigh
  
  

What to Watch For:

8:30 a.m. ET: Retail Sales (May)
10:30 a.m. ET: Weekly Petroleum Status Report