Written by Sumit Roy  |

September 14, 2012

Morning Call: WTI Spikes Above $100, Copper Surges To 4-Month High, Gold Steady Near $1770 On Stimulus

Details

The rally in commodity markets continues.

The rally in risk asset prices continues today on the back of Thursday's Fed decision to initiate an open-ended quantitative easing program. The U.S. dollar is down by 0.48 percent, its seventh decline in eight sessions.

In economic news, the consumer price index in the U.S. grew by 1.7 percent year-over-year in August, up from the 1.4 percent rate in the prior month. Core prices, excluding food and energy, grew by 1.9 percent, down from 2.1 percent.

Meanwhile, retail sales in August rose by 0.9 percent, slightly higher than the 0.8 percent that was expected.

• Though fundamentals remain extremely supportive, the rally in gold and silver is pausing today, as prices digest recent gains. The yellow metal was last trading up by $2.76, or 0.16 percent, to $1769.80, while the gray metal fell by $0.10, or 0.28 percent, to $34.58.
  
  Platinum rose by $13.74, or 0.82 percent, to $1697.74 and palladium jumped $12.25, or 1.78 percent, to $701.25.
  
  "The Fed's move will flood the market with liquidity, which will consequently push up inflation and drive investors to assets known to be good hedges, such as gold and silver," said Li Ning, an analyst at Shanghai CIFCO Futures. "At least in the short- to medium-term, the Fed's action will provide solid support for gold and help it test $1,800, or even $1,900."
  Gold at 6-month high as Fed fans inflation risk
  
  
• Crude oil is rising to the highest levels in four months today. Brent was last trading up by $0.32, or 0.27 percent, to $117.22, while WTI gained $1.38, or 1.4 percent, to $99.69 after reaching $100.42 earlier.
  
  "It's a great time to put money into oil," said Michael Lynch, president of Strategic Energy & Economic Research. "The stimulus plans and the Middle East tension are the horses pulling the cart."
  Oil Rises to $100 for First Time Since May After Stimulus
  
  
• Natural gas was last trading down by $0.03, or 0.92 percent, to $3.01/mmbtu.
  
  Prices may gradually move higher as the inventory surplus dwindles and as the winter heating season approaches.
  Natural Gas Hovers Near $3 As Inventory Surplus Continues To Shrink
  
  
• The grain complex is higher. Corn was last trading up by $0.05, or 0.58 percent, to $7.81/bushel, while soybeans traded up by $0.10, or 0.56 percent, to $17.44 and wheat jumped $0.15, or 1.6 percent, to $9.17.
  
  "We expect to see further price increases [in soybeans] that will erode demand and keep inventories in the U.S. at a certain minimum level in the wake of the drought-related harvest losses," said Tiberius Asset Management in a report.
  Soy, corn prices advance on Fed stimulus measures
  
  
• Copper is outperforming today on hopes that China will join the U.S. in easing monetary policy. The industrial metal was last trading up by $0.12, or 3.21 percent, to $3.85/lb—the highest level since April.
  
  There is increasing technical evidence to suggest that base metal prices are in the first part of a multiweek/month move higher; there appears to be a way to go yet," Marex Spectron said in a note.
  Copper rises to 4-1/2 month high after U.S. Fed stimulus
  
  
  

What to Watch For:

8:30 a.m. ET: Advance Retail Sales (August)

8:30 a.m. ET: Consumer Price Index (August)

9:15 a.m. ET: Industrial Production (August)

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