Written by Sumit Roy  |

September 12, 2012

Market Wrap: Platinum Surges $42 On Strike, Gold Steadies Ahead Of Fed, NatGas Breaks $3 In Front Of Inventory Report

Details

Commodities traded mixed.

Commodities were mixed, one day ahead of the most anticipated Federal Reserve policy decision of the year. Expectations are that the U.S. central bank will announce a third round of quantitative easing (QE3) when it announces its decision at 12:30 p.m. ET on Thursday. Anything short of that may be seen as a disappointment by markets.

Meanwhile in Europe, a widely watched ruling by the high court in Germany proclaimed that the country's participation in the bailout of other eurozone members was legal, but that any future increase in the size of the European Stability Mechanism (bailout fund) would need to be ratified by parliament.

Spanish 10-year bond yields—currently seen as the best gauge of eurozone sovereign debt crisis fears—continued to decline and were last trading down by 7 basis points to 5.63 percent.

The U.S. Dollar Index fell 0.19 percent to 79.71 after reaching a four-month low at 79.52 earlier.

• Gold and silver were little changed today, but remained near six-month highs ahead of Thursday's Fed decision. The yellow metal was last trading up by $0.01, or 0.04 percent, to $1732.85, while the gray metal fell by $0.18, or 0.52 percent, to $33.32.
  
  Platinum surged $42.29, or 2.63 percent, to $1648.29 and palladium edged up by $9.25, or 1.38 percent, to $679.50 after scattered strike activity by workers in South Africa shut down some production.
  
  "Prior to this, this was a [platinum] market that was in surplus this year. It might move towards balance, but it's not a market that is going to be in a significant deficit this year," said David Jollie, analyst at Mitsui Precious Metals.
  
  
• Crude oil traded narrowly mixed after the EIA's latest inventory figures failed to excite the market. U.S. crude oil inventories increased by 2 million barrels, gasoline inventories decreased by 1.2 million barrels, distillate inventories increased by 1.5 million barrels and total petroleum inventories increased by 3.4 million barrels last week, according to the EIA.
  
  Brent was last trading up by $0.35, or 0.3 percent, to $115.75, while WTI fell by $0.23, or 0.24 percent, to $96.96.
  
  "The [German court ruling is] supportive for the oil market," said Ric Spooner, chief market analyst at CMC Markets. "With the Fed, the issue is what they do and how big it's going to be. Without supply shocks, we are probably fairly close to the top end of the range for oil."
  
  
• Natural gas moved above $3/mmbtu ahead of Thursday's inventory report. Expectations are that the EIA will report a 26 billion cubic feet injection into storage for last week, which is much lower than normal. Gas was last trading at $3.04/mmbtu, up $0.05, or 1.64 percent, on the session.
  
  "We thought utility demand would likely limit inventory [growth], and that's what's happened," said Teri Viswanath, senior natural gas strategist at BNP Paribas. "If we think about where storage will be at year-end, we might have erased the storage surplus entirely."
  
  
• Grains traded mixed after the USDA's latest data on supply and demand. The soybeans harvest will be the smallest in nine years at 2.634 billion bushels, according to the latest department forecast. That's below the 2.659 billion that analysts had expected.
  
  However, the corn harvest is projected to total 10.727 billion bushels, above the 10.4 billion that was anticipated. Still, that's the smallest harvest in six years.
  
  Corn was last trading down by $0.11, or 1.44 percent, to $7.71/bushel, while soybeans jumped $0.42, or 2.46 percent, to $17.38 and wheat fell by $0.10, or 1.16 percent, to $8.50.
  
  "A third straight year of reduced U.S. production means soybeans buyers face an unprecedented tight supply for the next 12 months," said Jerry Gidel, chief feed-grain analyst at Rice Dairy LLC. "The short U.S. crop now puts all the focus on a successful start to the South American growing season for the next three months to bolster world supplies."
  
  
• Copper was last trading at $3.71/lb, down by 0.23 percent after hitting $3.74 earlier—the best level since early May.
  
  "We've now got a situation where the macro environment is beginning to turn more positive. Policy is becoming more positive for the base metals, so I think that is having the bigger influence on prices," said Barclays analyst Gayle Berry. "If we do get a big announcement from the Fed that the market perceives to be positive there is still further upside to metals prices."