Written by Sumit Roy  |

June 15, 2012

Morning Call: Gold Tops $1630 On Safety Buying Ahead Of Greece Election, Copper Rises Amid Central Bank Backstop

Details

Commodities trade mixed ahead of Greek elections on June 17.

Caution prevails in financial markets today, as commodities trade narrowly mixed ahead of the weekend's highly anticipated Greek parliamentary election (June 17), the result of which could decide whether the country remains in the eurozone.

On Thursday, markets got a boost after G-20 officials indicated that central banks would take coordinated action to provide liquidity to the global financial system should panic ensue following the Greek election.

The Spanish 10-year bond yield—currently seen as the best gauge of eurozone sovereign debt fears—was last trading lower by 4 basis points to 6.88 percent after reaching a euro-era record of 7 percent on Thursday.

The U.S. Dollar Index fell fractionally to 81.93, a loss of 0.07 percent.

• Precious metals are rising on safe-haven buying ahead of the Greece elections. Gold was last trading up by $7.70, or 0.47 percent, to $1631/oz, while silver added $0.18, or 0.63 percent, to $28.82.
  
  Platinum rose by $6, or 0.4 percent, to $1494 and palladium gained $4, or 0.63 percent, to $635.
  
  "Whatever the outcome in Europe, it will likely be supportive for gold," said Neil Gregson, who manages about $6.9 billion of natural-resources equities at JPMorgan Asset Management in London. "We've still got the possibility of QE3 in the U.S., which would be good for gold."
  Gold Traders Bullish as Hedge Funds Increase Wagers
  
  
• Crude oil prices were last trading modestly higher, as Brent gained $0.38, or 0.39 percent, to $97.41, while WTI added $0.21, or 0.25 percent, to $84.12.
  
  "Oil is following the improving euro. The market has been very short on fears of an economic collapse," said Thorbjoern Bak Jensen, an analyst at A/S Global Risk Management. "But now people think the moderates will win in Greece and are comforted that the central banks will step in."
  Oil rises with central banks' pledge to step in
  
  
• Natural gas is consolidating after surging 14 percent on Thursday amid a bullish inventory report, which showed that operators injected a smaller-than-expected amount of the fuel into storage last week.
  
  "We've seen lower production, and on the demand side, we've seen a lot more baseload power generation affecting the storage number," said Eric Bickel, analyst at Summit Energy.
  
  Gas was last trading at $2.50/mmbtu, a gain of $0.01, or 0.32 percent.
  US natural gas surges 14 pct, biggest gain since 2009
  
  
• The grain complex is narrowly mixed today, as corn sheds $0.03, or 0.57 percent, to $5.98/bushel, while soybeans adds $0.07, or 0.5 percent, to $13.93 and wheat trades unchanged at $6.23.
  
  "The overall export sales report was encouraging for wheat as well as soybeans, but a bit disappointing for the corn market," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia.
  U.S. heat rises for 2nd day as China cuts crop forecast
  
  
• Copper was last trading at $3.38/lb on Comex, a gain of $0.03, or 0.8 percent.
  
  "It seems markets are positioning for the Fed to announce some form of quantitative easing. You need a weaker dollar, that's the only reason metals will pick up. Markets already assume Greece will be out of the euro at some point," said Citi analyst David Wilson.
  Copper on track to end six-week losing streak; Greece eyed
  
  

What to Watch For:

9:15 a.m. ET: Industrial Production (May)
1:00 p.m. ET: Baker Hughes Rig Count