Written by Sumit Roy  |

August 31, 2012

Morning Call: Gold, Oil Rise As US Dollar Plunges To 3-Month Low Ahead Of Bernanke Speech

Details

Gold and oil rise, while grains fall.

A sharp drop in the U.S. dollar is boosting commodities ahead of Ben Bernanke's speech in Jackson Hole, Wyo., which is scheduled for 10 a.m. ET. While most market participants do not expect the Fed Chairman to make any promises in his remarks, hopes are high that he could hint at the potential for a third round of quantitative easing when the FOMC meets next month.

The U.S. Dollar Index was last trading down by 0.65 percent to 81.15, the lowest level since May 21.

Meanwhile, in Europe, Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt fears—rose by 11 basis points to 6.7 percent.

• Gold prices are higher amid the decline in the U.S. dollar. The yellow metal was last trading up by $5.28, or 0.32 percent, to $1660.88, while silver rose by $0.22, or 0.72 percent, to $30.65.
  
  Platinum gained $4.49, or 0.3 percent, to $1513.74 and palladium edged up by $2.17, or 0.35 percent, to $621.67.
  
  "There is certainly something already priced in for Jackson Hole, and there is a bit of disappointment potential here," Tobias Merath, an analyst at Credit Suisse, told Reuters. "Expectations for more monetary easing would have to be fulfilled to break higher here. For now, we have a bit of a cautious approach to the gold market."
  
  "We still think the base case is for further sideways trading, and that would only change if investment interest picks up to the extent that we are able to break $1,700," he added.
  Gold firms ahead of Bernanke speech
  
  
• Crude oil is higher, as Brent rises by $0.66, or 0.59 percent, to $113.31, while WTI gains $0.66, or 0.7 percent, to $95.28.
  
  "Supply fundamentals have been tight for crude recently and there is no immediate sign of that slipping," said Guy Wolf, strategist at Marex Spectron.
  Oil Heads for Second Monthly Gain Before Fed Chairman's Speech
  
  
• Natural gas was last trading at $2.74/mmbtu, a loss of $0.01, or 0.25 percent. This week's breach of the $2.70 support level may signal a larger correction in September.
  Natural Gas To Fall Toward $2.20 After Prices Fail To Hold Support
  
  
• The grain complex is slightly lower today. Corn was last trading down by $0.01, or 0.06 percent, to $8.11/bushel, while soybeans shed $0.03, or 0.17 percent, to $17.67 and wheat fell by $0.05, or 0.57 percent, to $8.79.
  
  The Russian government ruled out an export ban for wheat, despite recent sharp reductions in supply forecasts.
  
  "It's just a headline-grabbing stunt. In 2010 they kept being reassuring and then they changed their mind suddenly [and banned grain exports]. They could do just the same this year," one trader said.
  Russia rejects grain export limits as harvest outlook cut
  
  
• Copper was last trading up by $0.02, or 0.55 percent, to $3.46/lb on Comex.
  
  "Markets are on hold ahead of Bernanke's speech, that's very much the dominant theme that people are looking at across all financial markets," BNP Paribas strategist Stephen Briggs said.
  Copper rises on dollar, market awaits Bernanke speech
  
  
  

What to Watch For:

10:00 a.m. ET: Ben Bernanke's Jackson Hole Speech

10:00 a.m. ET: Factory Orders (July)

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