Written by Sumit Roy  |

August 29, 2012

Market Wrap: Gold Falls To $1660 After GDP Data, NatGas Rises From 2-Month Low Ahead Of Inventory Report

Details

Gold fell, while natural gas and grains rose.

Commodities were mixed today after the Bureau of Economic Analysis reported that the U.S. economy expanded by 1.7 percent in the second quarter, higher than its initial estimate of 1.5 percent. The upward revision was expected and still represents subpar growth, keeping hopes for further central bank stimulus alive.

In other U.S. economic data, pending home sales rose by 2.4 percent in July, besting the 1 percent increase that was expected.

In Europe, Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt fears—fell by 2 basis points to 6.46 percent.

The U.S. Dollar Index edged up by 0.23 percent to 81.56.

• The precious metals complex fell slightly today, as gold and silver continued to digest recent gains while awaiting Fed Chairman Ben Bernanke's speech on Friday. The yellow metal was last trading down by $6.50, or 0.39 percent, to $1660.40, while the gray metal edged down by $0.06, or 0.19 percent, to $30.83.
  
  Platinum rose by $2, or 0.13 percent, to $1520.75 and palladium fell by $3.75, or 0.59 percent, to $635.75.
  
  "We [think] that we will see a fairly dovish Bernanke on Friday and that he will commit, if not at Jackson Hole then at the September FOMC meeting, to deliver more easing to the market," Danske Bank analyst Christin Tuxen told Reuters.
  
  "That's a very favorable environment for gold, and that means that in the next three months at least, there should be some upside. I'm not sure we'll necessarily test new record highs, but there is potential for closing in on the $1,800 level within the next three months."
  
  
• Crude oil was mixed today, as operators began to survey Gulf of Mexico oil installations after the passing of Hurricane Isaac. Brent was last trading up by $0.04, or 0.04 percent, to $112.62, while WTI shed $0.83, or 0.86 percent, to $95.50.
  
  "The information we have on Isaac as of now suggests it has not been as destructive as the market had perhaps feared," said Hannes Loacker, an analyst at Raiffeisen Bank International. "The focus is on when the majority of production will resume and whether or not there will be any serious damage to the infrastructure."
  
  
• Natural gas was last trading up by $0.01, or 0.42 percent, to $2.63/mmbtu after reaching as low as $2.58 earlier—the worst level since June 24. Traders are looking toward the fall shoulder season, during which demand for gas falls to one of its seasonal troughs.
  
  Thursday's inventory report from the EIA may show that operators injected 60 billion cubic feet to 65 bcf into storage last week, according to a survey of analysts by Reuters.
  
  
• Grains outperformed today. Corn was last trading up by $0.21, or 2.63 percent, to $8.10/bushel, while soybeans rose by $0.25, or 1.41 percent, to $17.57 and wheat added $0.31, or 3.57 percent, to $8.85.
  
  "I think we have hit the lowest of the week [for wheat] yesterday. Now the market is focusing on the Russian meeting at the end of the week. Experience has showed anything can happen, even if I don't believe they will do anything just yet," a European trader said.
  
  
• Copper was last trading down by $0.02, or 0.59 percent, to $3.44/lb on Comex.
  
  "It is still a pretty ugly picture: the Chinese are still struggling with how their economy is faring given the downturn in Europe and elsewhere," Standard Bank analyst Leon Westgate told Reuters.
  
  "Weaker Asian markets are also weighing on metals and thin trading volumes ahead of Jackson Hole are a feature of the market this week. As a house, we are assuming there is going to be some sort of easing but the question is what form that takes, whether it's quantitative easing or some other mechanism."