Written by Sumit Roy  |

July 26, 2012

Market Wrap: Gold Hits $1615 After ECB Pledges 'Whatever It Takes,' Oil Rises On Strong US Economic Data

Details

With the exception of grains, most commodities rose today.

Commodities and stocks rose broadly today on a combination of encouraging comments from the head of the European Central Bank and positive economic data in the United States. ECB President Mario Draghi said that the central bank "is ready to do whatever it takes to preserve the euro."

The comments suggest that the ECB is 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—plunged on the news by 45 basis points to 6.93 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 0.8 percent to 82.86.

• Hopes that the ECB could take action and the decline 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 $0.14, or 0.51 percent, to $27.50.
  
  Platinum gained $5, or 0.36 percent, to $1404.75 and palladium edged up by $4, or 0.71 percent, to $570.25.
  
  "If we get QE3 or the ECB decides to relaunch LTRO [long term refinancing operation], then there would be a positive effect in gold," Anne-Laure Tremblay, precious metals analyst with BNP Paribas told HAI in a recent interview.
  
  
• Crude oil benefited from today's broad-based buying in financial markets. Brent was last trading higher by $0.81, or 0.78 percent, to $105.19, while WTI rallied $0.47, or 0.53 percent, to $89.44.
  
  "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.
  
  
• Natural gas edged higher after the EIA reported that operators injected 26 billion cubic feet into storage last week, close to expectations. Prices were last trading up by $0.02, or 0.68 percent, to $3.09/mmbtu.
  
  
• The grain complex underperformed after surging in the prior session. Corn was last trading down by $0.12, or 1.42 percent, to $7.83/bushel, while soybeans shed $0.29, or 1.67 percent, to $16.66 and wheat lost $0.17, or 1.91 percent, to $8.86.
  
  "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.
  
  
• Copper was last trading higher by $0.01, or 0.43 percent, to $3.39/lb on Comex. The industrial metal continued to take its cues from movements in the broader markets.