Written by Sumit Roy  |

August 24, 2012

Morning Call: Gold Falls For The First Time In 8 Sessions, But New Fed Comments Support; NatGas Rises

Details

Gold and silver finally fall on profit-taking.

Uncertainty about future Federal Reserve monetary policy continues to influence commodity markets, but the group is getting hit with modest profit-taking today. On Thursday, St. Louis Fed President Bullard said that additional monetary easing was not likely given the recent improvement in economic data.

But today, Chicago Fed President Charles Evans countered those views in comments to CNBC.

"The outlook for growth is 2 percent, if we are lucky 2.5 percent over the next 18 months to 2 years. Back in the spring we thought it was going to be 2.5-3 percent ... we stepped down our outlook, unemployment is 8.3 percent, there's a lot of reason to do more," he said.

In today's economic data, durable goods orders jumped by 4.2 percent in July, besting the 2.5 percent increase that was expected.

Meanwhile, in Europe, Spanish 10-year bond yields rose by 12 basis points to 6.47 percent.

The U.S. Dollar Index rose by 0.29 percent to 81.60 after hitting two-month lows in the prior session.

• Precious metals are edging down on minor profit-taking after this week's sizzling run. Gold was last trading down by $2.80, or 0.17 percent, to $1667.80, while silver edged down by $0.04, or 0.13 percent, to $30.54.
  
  Platinum fell by $7.76, or 0.50 percent, to $1534.49 and palladium lost $14.75, or 2.25 percent, to $640.
  
  "Having got the necessary signals from the Fed for QE3, the market is just waiting for a confirmation to spike higher," said Pradeep Unni, senior analyst at Richcomm Global Services. "Any consecutive release of weaker than expected economic data will only add fuel to the fire.
  
  "The gold bulls' next upside price breakout objective is to produce a close above psychological resistance at $1,700. First resistance is seen at $1,678.60, and then at $1,687.40," he added.
  Gold dips from 4-1/2 month high as Fed-linked rally cools
  
  
• Crude oil is slightly lower, with Brent last trading down by $0.21, or 0.2 percent, to $114.78, while WTI falls by $0.21, or 0.22 percent, to $96.06.
  
  "Oil is down today on economic concerns," said Carsten Fritsch, an analyst at Commerzbank. "QE3 hopes, geopolitical tensions and supply-side risks should limit the downside." 
  Oil Declines for Second Day as Storm Approaches Gulf
  
  
• Natural gas was last trading up by $0.04, or 1.32 percent, to $2.84/mmbtu after a whipsaw session on Thursday. Prices have once again managed to salvage the $2.75 support level, an encouraging sign for bulls.
  NatGas Vulnerable to Steep Technical-Driven Decline, But Fundamentals Remain Bullish
  
  
• The grain complex is bouncing back from Thursday's decline, as corn rises by $0.02, or 0.25 percent, to $8.11, while soybeans rises by $0.13, or 0.77 percent, to $17.41 and wheat adds $0.05, or 0.6 percent, to $8.79.
  
  "Export sales of soybeans were pretty good which are supportive for the market," one analyst told Reuters. "Soybeans are bit undervalued at the moment when you look at the bean market in relation to corn."
  Soy rebounds on U.S. exports; corn, wheat also firm
  
  
• Copper was last trading down by $0.02, or 0.54 percent, to $3.47/lb on Comex.
  
  "It'll take a lot of conviction to get fresh longs to come in at this point, so we will be facing pressure from the shorts today," said one analyst.
  Copper falls as Fed stimulus hopes wane, Spain in focus
  
  

What to Watch For:

8:30 a.m. ET: Durable Goods Orders (July)

1:00 p.m. ET: Baker Hughes Rig Count