Written by Sumit Roy  |

June 28, 2012

Market Wrap: WTI Sinks To 9-Month Low, Gold Plunges To $1550, Silver Near $26 Amid EU Summit

Details

Commodities fell across the board.

Commodities and stocks fell broadly today, as worries began to mount that a two-day summit of EU leaders—which began today—will fail to prevent the eurozone debt crisis from escalating. Though little changed today, yields on Spanish and Italian 10-year bond remained uncomfortably high at 6.94 percent and 6.2 percent, respectively.

In U.S. economic news, the number of people filing unemployment claims fell from an upwardly revised 392K to 386K last week.

The U.S. Dollar Index was last trading at 82.87, a gain of 0.3 percent.

• Gold and silver tumbled today, as investor appetite waned. The yellow metal was last trading down by $22.88, or 1.45 percent, to $1551.32/oz, while the gray metal edged plunged $0.68, or 2.53 percent, to $26.24.
  
  Platinum shed $19.75, or 1.4 percent, to $1389.75 and palladium lost $13, or 2.25 percent, to $564.75.
  
  "Technical levels show us when the trouble is coming. Gold struggled at $1,700 and then at $1,600. If it breaks through the next key level of $1,500, which could be approaching soon, investors would start panicking and selling hard," Yoni Jacobs, chief investment strategist at Chart Prophet Capital, told CNBC.
  
  "It appears that the market has decided on gold's fate. And it's not looking pretty.  It looks like gold is about to see prices collapse and is on its way to $700," Jacobs added.
  
  
• Crude oil prices plunged amid today's broad-based risk aversion. Brent was last trading down by $2.36, or 2.52 percent, to $91.14, while WTI fell $2.58, or 3.22 percent, to 77.64 after briefly touching a 9-month low.
  However, some analysts see the decline in oil prices as overdone.
  
  "We do look for a rebound and feel that the oil price has gone beyond economic fundamentals," Michael Lewis, Deutsche Bank's head of commodities research in London, said. "We are in quite an extreme level of investor pessimism, which would only seem to us justified if the U.S. was going back into a recession."
  
  
• Natural gas fell for the first time in six sessions today after the EIA reported that operators injected 57 billion cubic feet into storage last week, above the 52 to 53 bcf that analysts were expecting.
  
  However, an ongoing heat wave across the United States, which is boosting demand for the fuel, limited losses. Prices for gas were last trading at $2.70/mmbtu, a decline of $0.07, or 2.67 percent.
  
  
• Hot, dry weather in the Midwest continued to fuel speculation that the condition of the corn and soybeans crops will deteriorate further in the coming weeks. The USDA's latest supply and demand forecasts may corroborate these fears when they are released on Friday.
  
  "I think there is likely to be reduction in yield numbers which will ultimately lead to overall reduction in output," said Abah Ofon, an analyst at Standard Chartered Bank. "We are probably not going to return to the $4 a bushel level which was being suggested a few weeks ago with estimates of a record crop."
  
  Ahead of the USDA data, grains fell slightly on profit taking. Corn was last trading down by $0.03, or 0.42 percent, to $6.47/bushel, while soybeans was unchanged at $14.71, and wheat fell by $0.03, or 0.81 percent, to $7.25.
  
  
• Copper was last trading at $3.32/lb on Comex, a loss of $0.03, or 0.81 percent, as the industrial metal continued to take its cues from movements in broader financial markets.