Written by Sumit Roy  |

August 20, 2012

Morning Call: Gold Falls, Oil Rises On ECB Bond Buying Speculation; NatGas Rallies On Weather Forecasts

Details

Commodities trade mixed.

Speculation that the European central bank may limit sovereign borrowing costs by purchasing bonds on the open market when yields reach a certain level is boosting investor sentiment today. Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt fears—fell by 20 basis points to 6.24 percent.

Elsewhere, like last week, news flow is light, with no major macroeconomic data scheduled for release. The U.S. Dollar Index rose by 0.09 percent to 82.67.

• Gold was last trading down by $2.90, or 0.18 percent, to $1613.15, while silver shed $0.04, or 0.15 percent, to $28.04.
  
  Platinum shed $4.25, or 0.29 percent, to $1470 and palladium lost $8.50, or 1.4 percent, to $599.75.
  
  "Any key data relevant to price, the gold market this week is likely to be driven predominantly by political factors," said analysts at Commerzbank.
  
  "For example, several rounds of talks are due to take place between Germany's Chancellor [Angela] Merkel, French President [François] Hollande, Greek Prime Minister [Antonis] Samaras and Eurogroup President [Jean-Claude] Juncker," they wrote.
  Gold futures slip, platinum retreats after gains
  
  
• The bias in crude oil prices continues to be higher, as Brent adds $0.64, or 0.56 percent, to $114.35, while WTI gains $0.06, or 0.06 percent, to $96.07.
  
  "Oil prices are recouping some of the losses they suffered on Friday," said Carsten Fritsch, oil analyst at Commerzbank. "But there are plenty of reasons why oil prices should fall. The supply outages in the North Sea, which are currently lending support to the Brent price, are merely temporary in nature."
  Oil rises above $114 on tight North Sea supply
  
  
• Natural gas continues to trade near the $2.75/mmbtu support area. The latest weather forecast suggests that warmer-than-normal temperatures could reestablish themselves across the United States after a brief cool down.
  
  Prices were last trading up by $0.03, or 1.21 percent, to $2.75.
  Week In Review: NatGas At Critical Juncture
  
  
• The grain complex is mixed. Corn was last trading up by $0.04, or 0.53 percent, to $8.03/bushel, while soybeans rose by $0.10, or 0.57 percent, to $16.81 and wheat fell by $0.04, or 0.43 percent, to $8.71.
  
  "It is all about demand now. Corn prices need to trade higher to ration U.S. demand," said Christopher Gadd, analyst with Macquarie Securities.
  Wheat falls after three sessions of gains
  
  
• Copper was last trading down by $0.07, or 1.89 percent, to $3.36/lb.
  
  "The focus of the market is back on Europe and China," said Standard Bank Analyst Leon Westgate. "The housing data on the surface suggests that property controls are going to continue. In Europe, we've got a week of shuttle diplomacy and a lot of talking but not much action."
  Copper falls on eurozone disappointment, China worry
  
  

What to Watch For:

4:00 p.m. ET: USDA Crop Progress Report