Written by Sumit Roy  |

June 13, 2012

Market Wrap: Gold Rises Near $1620, WTI Sinks As Eurozone Concerns Remain In Focus Ahead Of Italian Auction

Details

Precious metals rose, while other commodities fell in today's session.

With little in the way of news to direct prices, trading in commodity markets was choppy today. Concerns about the eurozone sovereign debt crisis remain the focus ahead of an auction of Italian debt on Thursday. But 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 5 basis points to 6.75 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 up by 5 basis points to 6.22 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 that were calling for no change.

The U.S. Dollar Index fell by 0.52 percent to 82.

• The precious metals sector rose today thanks to the decline in the U.S. currency. Gold edged up by $8.80, or 0.55 percent, to $1618.60/oz, while silver added $0.01, or 0.03 percent, to $28.98.
  
  Platinum was last trading higher by $14, or 0.97 percent, to $1464 and palladium lost $3, or 0.32 percent, to $622.
  
  "[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."
  
  
• Crude oil prices edged lower after the latest Weekly Petroleum Status Report from the EIA, which showed that U.S. crude oil inventories decreased by 0.2 million barrels, gasoline inventories decreased by 1.7 million barrels, distillate inventories were unchanged and total petroleum inventories increased by 1.2 million barrels last week.
  
  Brent was last trading at $97.13, a loss of $0.01, or 0.01 percent, while WTI shed $0.66, or 0.79 percent, to $82.66.
  
  "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."
  
  
• Natural gas prices were last trading at $2.19/mmbtu, a loss of $0.04, or 1.97 percent.
  
  
• The grain complex was mixed, as corn added $0.09, or 1.46 percent, to $5.93/bushel, while soybeans fell by $0.27, or 1.9 percent, to $14.08 and wheat was unchanged at $6.16.
  
  The Australian Bureau of Agricultural and Resource Economics and 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.
  
  
• Copper was last trading at $3.33/lb on Comex, a loss of $0.01, or 0.19 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 eurozone problems, which have so many implications for the world economy," said Li Rong, an analyst at Great Wall Futures.