Written by Sumit Roy  |

June 29, 2012

Morning Call: Gold Spikes $45 To Nearly $1600; Oil, Silver, Copper Surge After EU Leaders Act To Stem Crisis

Details

Finally, it was agreed that the ESM bailout fund will have the power to purchase a country's bonds on the secondary market without imposing harsh austerity conditions on said country. This may prove useful in preventing yields from spiking dramatically.

Indeed, Spanish and Italian 10-year bond yields plunged after the news and were last trading at 6.52 percent and 5.86 percent, respectively, down 42 basis points and 34 basis points.

Today's economic news was as expected. U.S. personal income rose by 0.2 percent in May, matching analyst estimates. Personal spending in the month was flat, also equal to expectations.

• Precious metals are surging, as the sector benefits from the increase in investor appetite for risk. Gold was last trading up by $45.25, or 2.91 percent, to $1597.88/oz, while silver spiked $1.38, or 5.23 percent, to $27.76.
  
  Platinum rose by $38.28, or 2.75 percent, to $1427.78 and palladium gained $14.40, or 2.55 percent, to $579.90.
  
  "The news has been positive for the euro and positive for confidence in general, which means that equities and commodities, including gold for the time being, have all received a shot in the arm," Simon Weeks, head of precious metals at the Bank of Nova Scotia, said.
  Gold rallies 2 percent as EU summit boosts confidence
  
  
• Crude oil prices are spiking amid today's broad-based buying. Brent was last trading higher by $3.51, or 3.84 percent, to $94.87, while WTI jumped $3.41, or 4.39 percent, to $81.10.
  
  "We're about to begin the Iranian oil embargo so we'll start to get a look over time about what the impacts of that are going to be," said Ric Spooner, chief market analyst at CMC Markets. "It's going to take supply off the market, but the question is to what extent that draws down inventories and affects excess capacity."
  Oil Rises From Nine-Month Low on Supply, Europe Measures
  
  
• Natural gas is bouncing back from the prior session's decline. Prices were last trading at $2.78/mmbtu, a gain of $0.06, or 2.13 percent.
  
  "We think natural gas prices have bottomed and are likely to move higher. Barring any major government policy changes and unusual weather impacts, natural gas prices should climb above $4/mmbtu in the next two years," said Fadel Gheit, senior energy analyst at Oppenheimer & Co.
  Oppenheimer's Gheit: NatGas Headed Above $4, Anadarko Top Oil & Gas Stock
  
  
• Grains tempered their gains after the latest USDA data. The department said that farmers planted corn on 96,405,000 acres this season, above the 96,020,000 that was expected and the prior estimate of 95,864,000. Meanwhile, farmers planted soybeans on 76,080,000 acres, above the 75,500,000 that was anticipated and the prior estimate of 73,902,000.
  
  Corn was last trading up by $0.18, or 2.72 percent, to $6.70/bushel, while soybeans rose by $0.15, or 1.02 percent, to $14.81 and wheat advanced $0.08, or 1.14 percent, to $7.34.
  Larger U.S. corn, soy area may not ease drought worry
  
  
• Copper is surging today, with prices last trading up by $0.14, or 4.13 percent, to $3.46/lb.
  
  "Clearly the reason for the rally in base metals is to do with the overnight news from the European meetings, and the consequent sharp impact on the dollar/euro exchange rate," BNP Paribas strategist Stephen Briggs said. "I don't think there is any other game in town."
  Copper up on EU deal, still on track for Q2 drop
  
  

What to Watch For:

8:30 a.m. ET: U.S. Personal Income/Spending (May)