Written by Sumit Roy  |

August 08, 2012

Market Wrap: Gold Steadies At $1612, Oil Retreats On Profit Taking, NatGas Falls Despite Output Cut

Details

Most commodities fell today.

Commodities mostly fell today after three days of solid gains. Once again, there are no major macroeconomic releases in the session and the selling was likely mere profit-taking.

In Europe, Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt fears—were unchanged at 6.87 percent.

The U.S. Dollar Index rose by 0.27 percent to 82.43.

• Gold was last trading down by $0.45, or 0.03 percent, to $1611.75, while silver shed $0.12, or 0.44 percent, to $28.01.
  
  Platinum lost $0.50, or 0.04 percent, to $1408.25 and palladium shed $0.55, or 0.09 percent, to $586.20.
  
  "With resistance at $1,617-1,620 pretty formidable, and amidst quieter news, gold is likely to hover around $1,608-1,615 in today's trade," Richcomm Global Services Senior Analyst Pradeep Unni said.
  
  "Gold seems to be supported by hopes that Europe and the United States would launch more stimulus measures to help shore up their faltering economies," he added. "Investors are betting that the festering debt crisis in the euro zone could push the ECB to launch a new round of bond-buying soon."
  
  
• Crude oil prices fell after the EIA's Weekly Petroleum Status report. Brent was last trading down by $0.41, or 0.37 percent, to $111.59, while WTI fell by $0.52, or 0.56 percent, to $93.15.
  
  U.S. crude oil inventories decreased by 3.7 million barrels, gasoline inventories decreased by 1.8 million barrels, distillate inventories decreased by 0.7 million barrels and total petroleum inventories decreased by 1 million barrels last week.
  
  "We'll probably need to see further good news, further improvements in demand and the economic growth outlook for oil to move significantly higher," said Ric Spooner, a chief market analyst at CMC Markets. "We have seen a strong rally off the bottom of a few weeks ago."
  
  
• Natural gas was last trading down by $0.05, or 1.69 percent, to $2.91/mmbtu. Chesapeake Energy, the second-largest producer in the U.S., said that its natural gas production will decline 7 percent next year.
  
  "We believe this trend of declining gas production could continue as long as gas prices do not permit gas producers to earn an attractive return on the investments necessary to finish developing the big new unconventional gas fields that have led to America's greatly increased gas production over the past five years," said CEO Aubrey McClendon.
  
  
• The grain complex outperformed today. Corn was last trading up by $0.12, or 1.48 percent, to $8.08/bushel, while soybeans traded higher by $0.15, or 0.92 percent, to $16.20 and wheat rose by $0.03, or 0.37 percent, to $8.92.
  
  "We have a holding pattern in the market today with participants waiting to see what the USDA will say on Friday and also waiting to hear the decision from the Russian meeting about grain exports," said Rabobank Analyst Erin FitzPatrick.
  
  "There are forecasts of more rain in the U.S. which is adding weakness to prices. But this rain is now likely to be too late to save much of the U.S. corn crop," she added.
  
  
• Copper was last trading down by $0.03, or 0.84 percent, to $3.41/lb on Comex.
  
  "The sense from the recent ECB meeting is that maybe things will not get significantly worse and that the ECB may start to act as a lender of last resort," said Robin Bhar, analyst at Societe Generale.
  
  "That perhaps has put a floor under metals prices and, barring any further negative news, one could argue most of the bearish news flow should be in the price."