Written by Sumit Roy  |

August 14, 2012

Morning Call: Oil, Gold Rise After Strong US Retail Sales; Eurozone Economy Contracts

Details

Commodities are higher across the board.

The eurozone economy contracted in the second quarter, but commodities are rising amid relief that growth in the region didn't fare even worse. Aggregate gross domestic product in the eurozone fell by 0.2 percent quarter-over-quarter, matching expectations.

The eurozone's lynchpin, Germany, saw its economy expand by 0.3 percent, slightly better than the anticipated 0.2 percent.

Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt fears—fell by 11 basis points to 6.73.

Meanwhile, in the U.S., retail sales grew by 0.8 percent in July, well above the consensus estimate of 0.3 percent.

The U.S. Dollar Index fell by 0.11 percent to 82.35.

• Gold was last trading up by $0.55, or 0.03 percent, to $1610.30, while silver rose by $0.07, or 0.24 percent, to $27.88.
  
  Platinum jumped $21.49, or 1.55 percent, to $1408.74 and palladium edged up by $5.25, or 0.91 percent, to $569.50.
  
  "Gold prices are holding up very well in the light of weak demand from the jewelry sector and from investors," Commerzbank analyst Eugen Weinberg said. "That bodes well for a price increase that we expect for the end of the third quarter and the fourth quarter."
  Gold firms in line with euro; stimulus news awaited
  
  
• Crude oil is modestly higher today, as Brent gains $0.36, or 0.32 percent, to $113.96, while WTI rises by $0.53, or 0.57 percent, to $93.26.
  
  "The general positive tone in financial markets, plus supply risks and geopolitical tensions, is supporting oil," said Carsten Fritsch, an analyst at Commerzbank. "The oil price increase is dangerous because it isn't driven by demand."
  Oil Rises for First Time in 3 Days on Likely Supply Drop
  
  
• Natural gas was last trading up by $0.04, or 1.58 percent, to $2.77/mmbtu. Thus far, prices have been able to salvage the support area near $2.75 despite the forecast of cooler-than-normal temperatures across the United States.
  Natural Gas and Its Role In the US' Energy Endgame
  
  
• The grain complex is higher, as prices continue to consolidate near multimonth or record highs. Corn was last trading higher by $0.05, or 0.64 percent, to $7.88/bushel, while soybeans rose by $0.14, or 0.83 percent, to $16.70 and wheat added $0.07, or 0.82 percent, to $8.64.
  Grains market steadies after pullback, Egypt seeks more wheat
  
  
• Copper rose by $0.02, or 0.61 percent, to 3.37/lb on Comex.
  
  "This morning, it's the dollar-euro. The base metals are rebounding along with other markets," said analyst Andrey Kryuchenkov of VTB Capital. "There's no indication of any spot demand. So when there's nothing else, the big players remain sidelined and try to figure out the macro outlook."
  Copper turns higher on German, French data, stimulus hopes
  
  

What to Watch For:

8:30 a.m. ET: Retail Sales (July)

4:30 p.m. ET: API Statistical Summary