Written by Sumit Roy  |

July 26, 2012

Morning Call: Gold Jumps To $1615 On ECB Comments, Dollar Plunge; Oil Rises As Jobless Claims Drop

Details

Most commodities are higher today.

Commodities and stocks are surging and Spanish bond yields and the U.S. dollar are plunging after European Central Bank President Mario Draghi said that the central bank "is ready to do whatever it takes to preserve the euro." The comments suggested that the ECB was ready to take action to stem the debt crisis and prevent interest rates in Spain and Italy from spiking ever-higher.

Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt fears—fell by 41 basis points to 6.96 percent, down significantly from the record high of 7.75 percent set in the prior session.

In U.S. economic news, the number of people filing for unemployment benefits last week fell from 388K to 353K, close to the four-year low set two weeks ago. Durable goods orders in June rose by 1.6 percent, besting the expectation of a 0.3 percent increase.

Meanwhile, the U.S. Dollar Index sank 0.7 percent to 82.94.

• Hopes that the ECB could take action and the plunge in the U.S. dollar are spurring another session of big gains for gold. The yellow metal was last trading up by $11.23, or 0.7 percent, to $1615.68, while silver rose by $0.29, or 1.05 percent, to $27.65.
  
  Platinum gained $14, or 1 percent, to $1413.75 and palladium edged up by $7.15, or 1.26 percent, to $573.40.
  
  "Gold has shown itself sensitive to monetary policy announcements this year and any indication of further easing [buoys] gold prices," said HSBC analyst Jim Steel.
  Gold hits 3-week high as ECB comments lift euro
  
  
• Crude oil is benefiting from today's broad-based buying in financial markets. Brent was last trading higher by $0.91, or 0.87 percent, to $105.29, while WTI rallied $0.66, or 0.74 percent, to $89.63.
  
  "The biggest problem of this market is a lack of trust, and [ECB President] Draghi's comments are bringing back that trust, and with it, confidence," said Eugen Weinberg, head of commodity market research at Commerzbank AG.
  Oil Rises in New York After ECB Says Euro Will Survive
  
  
• Natural gas is edging higher ahead of the EIA's Weekly Natural Gas Storage report, which may show that operators injected 25 billion cubic feet into inventories last week. Prices were last trading up by $0.02, or 0.75 percent, to $3.09/mmbtu.
  Ahead of the Bell: Natural Gas supplies
  
  
• The grain complex is underperforming after surging in the prior session. Corn was last trading down by $0.01, or 0.09 percent, to $7.94/bushel, while soybeans shed $0.11, or 0.63 percent, to $16.84 and wheat lost $0.06, or 0.64 percent, to $8.98.
  
  "In terms of the outlook for soybeans, there is still a chance to improve with rain forecast but for corn what is done is done," said one analyst.
  Soy falls on rain, Russia export sale cools wheat
  
  
• Copper was last trading higher by $0.04, or 1.13 percent, to $3.41/lb on Comex. The industrial metal continues to take its cues from movements in the broader markets.
  Copper rises as dollar falls, debt crisis subdues gains
  
  

What to Watch For:

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

8:30 a.m. ET: Durable Goods Orders (June)

10:00 a.m. ET: Pending Home Sales (June)

10:30 a.m. ET: Weekly Natural Gas Storage Report