Written by Sumit Roy  |

August 22, 2012

Market Wrap: Gold Hits 3-1/2 Month High Near $1650 As Fed Hints At Stimulus, Silver & NatGas Also Rise

Details

Minutes from the last Fed meeting suggest the central bank was strongly considering additional monetary easing.

Commodities were mixed, but precious metals rose after the minutes from the Federal Reserve's August 1 meeting indicated the central bank was strongly considering new stimulus measures.

"Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery," said the minutes.

In other economic news, existing home sales in the U.S. rose by 2.3 percent to 4.47 million units, slightly below expectations.

The U.S. Dollar Index fell by 0.28 percent to 81.68.

• Gold and silver rose to the highest levels since May and June, respectively, as the precious metals benefited from today's Fed minutes and the aggressive rally in platinum prices. The yellow metal was last trading up by $8.25, or 0.5 percent, to $1646.05, while the gray metal added $0.30, or 1.03 percent, to $29.62.
  
  Platinum rose by $20.50, or 1.36 percent, to $1527.75—the highest since May—and palladium edged up by $6.25, or 1 percent, to $630.50.
  
  "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."
  
  
• Crude oil prices are fell slightly after the EIA's Weekly Petroleum Status report. Brent was last trading down by $0.62, or 0.54 percent, to $114.02, while WTI edged down by $0.10, or 0.1 percent, to $96.58.
  
  U.S. crude oil inventories decreased by 5.4 million barrels, gasoline inventories decreased by 1 million barrels, distillate inventories increased by 1 million barrels and total petroleum inventories decreased by 3 million barrels last week, according to the EIA.
  
  
• Natural gas was last trading up by $0.04, or 1.51 percent, to $2.82/mmbtu. The latest weather forecasts continue to indicate that warmer-than-normal temperatures will dominate the United States over the next two-week period.
  
  
• Corn and soybeans were slightly lower after reaching levels just shy of their record highs. Corn was last trading down by $0.03, or 0.39 percent, to $8.28/bushel, while soybeans shed $0.12, or 0.66 percent, to $17.42 and wheat fell by $0.07, or 0.72 percent, to $8.94.
  
  "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."
  
  
• Copper was last trading unchanged at $3.46/lb on Comex.
  
  BHP Billiton, the world's largest miner, said it would delay a major $20 billion copper project due to cost inflation.