Written by Sumit Roy  |

June 14, 2012

Morning Call: Gold Rises As Spanish Yields Spike To 7% After Moody’s Rating Cut, Oil At Low On OPEC

Details

Precious metals rise, while other commodities struggle amid Spanish woes.

A week after Fitch made a similar move, ratings agency Moody's cut its sovereign credit rating for Spain from A3 to Baa3, leaving it one notch above junk bond levels. The Spanish 10-year bond yield—currently seen as the best gauge of eurozone sovereign debt fears—was last trading up by 20 basis points to 6.95 percent after reaching 6.998 percent earlier, a fresh euro-era record.

Meanwhile, the equivalent yield on Italian bonds was trading unchanged at 6.21 percent after the government auctioned 4.5 billion euros ($5.6 billion) worth of medium-term maturities at interest rates close to market levels.

In economic news, the number of people filing unemployment claims in the United States rose from 380K to 386K last week.

The U.S. Dollar Index was last trading up by 0.15 percent to 82.18.

• Gold is rising to the top of its recent range today, as Europe worries support the safe-haven metal. Prices were last trading up by $7.37, or 0.46 percent, to $1624.43/oz, while silver edged up by $0.12, or 0.42 percent, to $28.95.
  
  Platinum rose by $20.25, or 1.38 percent, to $1485 and palladium gained $5.63, or 0.91 percent, to $624.75.
  
  "Gold is sitting waiting for something to happen, but I would argue it is waiting for something to happen in the United States, rather than Europe," Natixis analyst Nic Brown said.
  
  "[We need] more clarity in the United States over whether the economic data is going to improve again ... or whether the weakening data is a sign of slower economic growth, and that therefore the Fed will have to do something."
  
  "For me, the focus is definitely on the U.S. side of the Atlantic. In the meantime, gold is going up, down or sideways dependent on what is going on in the euro/dollar rate, and there isn't a great deal else that is moving it around.
  Gold Edges Higher, Traders Warily Eye Europe
  
  
• Crude oil prices are lower, as Brent and WTI trade near 18-month lows and eight-month lows, respectively. The former was last trading down by $0.55, or 0.57 percent, to $96.58, while the latter shed $0.04, or 0.05 percent, to $82.58.
  
  No change in output quotas is expected at today's OPEC meeting, according to sources. With the cartel currently producing 1.6 mmbbl/d above its stated ceiling, the meeting will have little impact on the market regardless of the outcome.
  Oil Trades Near Eight-Month Low Before OPEC Meeting
  
  
• Natural gas is higher by $0.04, or 1.69 percent, to $2.22/mmbtu ahead of the Energy Information Administration's Weekly Storage Report, which is expected to show an injection of between 71 and 75 bcf for last week.
  Ahead of the Bell: Natural gas supplies
  
  
• The grain complex is a mixed bag today, as corn adds $0.06, or 1.01 percent, to $5.99/bushel, while soybeans sheds $0.04, or 0.28 percent, to $14.04 and wheat gains $0.06, or 1.01 percent, to $6.22.
  Corn, wheat markets rally in overnight trading
  
  
• Copper was last trading at $3.33/lb, a gain of $0.01, or 0.15 percent.
  
  "The Greek elections are definitely a focus of market players and no one wants to be positioned ahead of these elections as the outcome is so uncertain," Daniel Briesemann, an analyst at Commerzbank, said.
  Copper steady ahead of uncertain Greek elections
  
  

What to Watch For:

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

8:30 a.m. ET: Consumer Price Index (May)