Written by Sumit Roy  |

August 23, 2012

Market Wrap: Gold Spikes To 4-Month High Above $1670, Silver Surges Above $30; Oil & NatGas Sink

Details

Metals rose, while energy fell.

Precious metals continued to surge, but other commodities declined along with stocks in today's session. The S&P 500 fell, as technical traders sold after the stock index failed to break through the 1420 resistance level.

That spurred modest selling across financial markets. Part of the selling also came from St. Louis Fed President James Bullard, who told CNBC that the recent improvement in economic data means that the central bank probably won't take any new action.

"If we were to resume, and I think we will, 2 percent growth, maybe a bit stronger than that in the second half of the year, unemployment ticks down through the rest of the year, that's not a great outcome but that's a good enough outcome to keep us on hold," he said.

His words were in contrast to Wednesday's minutes from the Federal Reserve's August 1 meeting, which indicated that central bank officials were strongly considering additional stimulus.

Of course, the expectation is still that the Fed will ease monetary policy further, but only if economic data warrants it. The recent trend of improving economic indicators discourages the Fed from acting.

In today's economic news, new home sales in the U.S. rose by 3.6 percent to 372K units in July, the highest level since April 2010.

The U.S. Dollar Index fell by 0.16 percent to 81.36.

• Precious metals surged again today despite the uncertainty surrounding future Fed stimulus. Technical traders bought gold and silver aggressively after a breakout above key resistance levels of $1641 and $30, respectively.
  
  The yellow metal was last trading up by $15.80, or 0.95 percent, to $1670.45, while the gray metal rose by $0.68, or 2.27 percent, to $30.51.
  
  Platinum gained $7, or 0.46 percent, to $1543 and palladium jumped $22.67, or 3.59 percent, to $654.42.
  
  "Gold [broke] from the previous range and into a higher price range ahead of the peak consumption season," said Chen Min, an analyst at Jinrui Futures in China.
  
  
• Crude oil fell amid the decline in stock markets. Brent was last trading down by $0.34, or 0.3 percent, to $114.57, while WTI shed $1.31, or 1.35 percent, to $95.95—after hitting a new three-month high above $98 earlier.
  
  "There are increasing European jitters weighing on the stock market and oil," said Jason Schenker, president of Prestige Economics. "The market moved higher on the Fed minutes, which didn't signal much. Additional stimulus is no more likely than before."
  
  
• Natural gas fell by $0.09, or 3.15 percent, to $2.74/mmbtu after the EIA reported that operators injected 47 billion cubic feet into storage last week, above the 38 bcf that analysts were expecting.
  
  "The net injection was more than expected and implies a weakening in the background supply/demand balance," Tim Evans, analyst at Citi Futures Perspective, said.
  
  
• The grain complex fell after corn and soybeans were unable to break to new record highs. Corn shed $0.22, or 2.68 percent, to $8.08/bushel, while soybeans fell by $0.22, or 1.27 percent, to $17.26 and wheat lost $0.21, or 2.37 percent, to $8.75.
  
  
• Copper was last trading up by $0.02, or 0.52 percent, to $3.47/lb, as the industrial metal remained range-bound between $3.30 and $3.55.