Written by Sumit Roy  |

August 22, 2012

Morning Call: Gold, Silver, Platinum Continue To Rally; Oil Mixed Ahead Of Inventory Report

Details

Precious metals rise, while other commodities trade mixed.

We're seeing mixed performance in commodity markets today, as prices pause after rising across the board in the prior session. However, the rally in precious metals continues on the back of more gains from platinum.

Two economic releases worth watching today are U.S. existing home sales for July, scheduled for release at 10 a.m. ET and the minutes of the last FOMC meeting, which will be unveiled at 2 p.m. ET.

In Europe, Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt fears—were last trading up by 2 basis points to 6.23.

The U.S. Dollar Index was last trading up by 0.11 percent to 82.

• Gold and silver are at the highest levels since May and June, respectively, as the precious metals benefit from platinum's rally. The yellow metal was last trading up by $4.05, or 0.25 percent, to $1641.85, while the gray metal added $0.18, or 0.61 percent, to $29.49.
  
  Platinum rose by $14.37, or 0.95 percent, to $1521.62—the highest since May—and palladium edged up by $3, or 0.48 percent, to $627.25.
  
  "The level of violence [in South Africa] is surprising. But the current level of disruption to the platinum markets doesn't seem likely to put it into deficit, although it will move it closer towards balance," said David Jollie, analyst at Mitsui Precious Metals.
  
  "But ... if demand is still below the level of supply to the market and there is no further disruption ... then there is no reason other than nerves and short covering why in the short term prices should move much higher."
  Platinum hits 3-1/2 month high on South Africa tensions
  
  
• Crude oil prices are narrowly mixed ahead of the EIA's Weekly Petroleum Status report. Brent was last trading down by $0.69, or 0.6 percent, to $113.95, while WTI edged up by $0.01, or 0.01 percent, to $96.69.
  
  The less authoritative API report showed that crude inventories fell by 6 mmbbl, gasoline inventories rose by 0.9 mmbbl and distillate inventories fell by 1 mmbbl last week.
  
  "Oil is going to be caught in a tug-of-war range until the issues of geopolitical turbulence or economic slump are resolved," said Christopher Bellew, senior broker at Jefferies Bache. "Ultimately, bullish factors such as tension over Iran, instability in the wider Middle East and good economic growth in emerging markets will win out, but for now the market will be range-bound."
  Oil Near Three-Month High in New York Amid Supply Risks
  
  
• Natural gas was last trading up by $0.05, or 2.05 percent, to $2.81/mmbtu. The latest weather forecasts continue to indicate that warmer-than-normal temperatures will dominate the United States over the next two-week period.
  Strange Bedfellows Debate Exporting Natural Gas
  
  
• Corn and soybeans are slightly lower after reaching levels that are just shy of their record highs. Corn was last trading down by $0.04, or 0.51 percent, to $8.27/bushel, while soybeans shed $0.08, or 0.47 percent, to $17.45 and wheat fell by $0.09, or 0.97 percent, to $8.92.
  
  "There is still no end in sight to the upside pressure on the corn price, partly amid fears that the drought in the U.S. could have far worse consequences than previously thought," said analysts at Commerzbank. "The soybean price could likewise find further support."
  Soy, corn dip after rally; market eyes crop tour
  
  
• Copper was last trading down by $0.01, or 0.36 percent, to $3.44/lb on Comex.
  
  BHP Billiton, the world's largest miner, said that it would delay a major $20 billion copper project due to cost inflation.
  Copper falls on strong dollar, BHP cut cushions price
  
  
  

What to Watch For:

10:00 a.m. ET: Existing Home Sales (July)

10:30 a.m. ET: API Weekly Petroleum Status Report

2:00 p.m. ET: Minutes of FOMC Meeting