Written by Sumit Roy  |

June 21, 2012

Morning Call: Brent At 19-Month Low, WTI Below $80, Gold Tumbles To $1590 On Fed Disappointment

Details

• Gold is leading precious metals lower, as the yellow metal struggles after the Fed dashed hopes for QE3 on Wednesday. Prices were last trading down by $18.55, or 1.15 percent, to $1588.93/oz, while silver shed $0.50, or 1.76 percent, to $27.67.
  
  Platinum lost $1.03, or 0.07 percent, to $1457.72 and palladium shed $4.40, or 0.71 percent, to $614.85.
  
  "I think people's estimation of the probability of QE III was pretty low, but now we're seeing a bit of an unwind in gold," Credit Suisse analyst Tom Kendall said. "Looking forward now to see what happens with U.S. data - the jobs data in particular. The market will also be intensely focused on the next FOMC in August."
  
  "They can't really do anything additional really on Operation Twist as that is set in motion for the next six months," he said. "So if there's something in August, it will either be some new unconventional measure, which is possible, or what the market would really interpret bullishly is a further extension of the Fed's balance sheet."
  Gold slips below $1600 as Fed disappoints
  
  
• The free-fall in crude oil prices continues today, as Brent drops to a fresh 19-month low, while WTI hits an 8-1/2 month low. Brent was last trading down by $0.82, or 0.88 percent, to $91.67 after hitting $91 earlier. WTI fell by $1.28, or 1.56 percent, to $80.52 after falling as low as $79.96.
  
  “There’s negative momentum in the market, which is being accelerated by the inventory data, bad economic sentiment and a stronger dollar,” said Eugen Weinberg, head of commodities research at Commerzbank AG. “I see markets bottoming in late summer, until then further slippage is likely.”
  Oil Drops Below $80 to 8-Month Low on U.S. Supply, Europe
  
  
• Natural gas was last trading up by $0.02, or 0.64 percent, to $2.53/mmbtu ahead of the EIA’ Weekly Storage Report, which is expected to show that operators injected 64 billion cubic feet into inventories last week.
  Gas Futures Await Thursday Inventory Data
  
  
• The grain complex is modestly lower today, as corn falls by $0.05, or 0.74 percent, to $6.07/bushel, while soybeans sheds $0.08, or 0.57 percent, to $14.38 and wheat loses $0.04, or 0.64 percent, to $6.60.
  
  We are seeing a risk-off day," said Luke Mathews, commodities strategist for the Commonwealth Bank of Australia. "The crude oil market is extending its very sharp losses from yesterday on the back of negative sentiment flowing around the market, and that influence is flowing through into grains."
  Prices drop after Fed, weather woes check losses
  
  
• Copper fell by $0.05, or 1.43 percent, to $3.34/lb on Comex.
  
  "There were some hope that the Fed would take further aggressive measures [to stimulate the economy] and the market has been disappointed," said Ross Strachan, economist at Capital Economics.
  Copper at one-week low on global growth woes