Written by Sumit Roy  |

September 19, 2012

Morning Call: Gold Trades Near $1770 After BOJ Expands QE Program, Oil Falls Again, Copper Rises

Details

Commodities trade mixed.

Commodities are mixed today, as prices continue to consolidate following the rally of the last few weeks. In today's news, the Bank of Japan expanded its asset purchase fund from 45 trillion yen to 55 trillion ($700 billion). That's the equivalent of $130 billion of additional quantitative easing.

In the U.S., housing starts rose 2.3 percent to 750K in August, while building permits fell 1 percent to 803K.

The U.S. Dollar Index rose by 0.14 percent to 79.36.

• Precious metals are lower today. Gold was last trading down by $2.15, or 0.12 percent, to $1769.85, while silver fell $0.49, or 1.4 percent, to $34.33.
  
  Platinum lost $1.01, or 0.06 percent, to $1630.99 and palladium was flat at $666.75.
  
  "I think other central banks will announce more accommodative policies and that should continue to support gold," said Jeremy Friesen, commodity strategist at Societe Generale.
  Gold hits 6-1/2 month top, BOJ move extends stimulus rush
  
  
• Crude oil prices are lower again today, having declined every session this week. Brent was last trading down by $1.27, or 1.13 percent, to $110.76, while WTI fell by $0.57, or 0.6 percent, to $94.72.
  
  API said that crude inventories rose by 2.4 mmbbl last week, while gasoline inventories rose by 0.1 mmbbl, and distillate inventories fell by 1.1 mmbbl. The official government figures will be released at 10:30 a.m. ET as usual.
  Oil falls as Spain finance worries resurface
  
  
• Natural gas was last trading up by $0.02, or 0.58 percent, to $2.79/mmbtu, as prices remain range-bound between $2.60 and $3.20.
  
  The Energy Department delayed a report on the economic impact of natural gas exports. The DOE now expects the study to be complete by the end of the year.
  Gas-Export Study Delay Puts U.S. Projects in Limbo for This Year
  
  
• The grain complex is rebounding after plunging in recent sessions. Corn was last trading up by $0.07, or 1.01 percent, to $7.48/bushel, while soybeans gained $0.23, or 1.4 percent, to $16.63 and wheat rallied $0.14, or 1.56 percent, to $8.77.
  
  "There is bargain hunting with more fund money coming into the market today," one European trader said. "This is supporting soybeans and pushing up wheat and corn in sympathy, with wheat seeing some chart-based buying."
  Soybeans and wheat bounce after sell-off
  
  
• Copper was last trading up by $0.02, or 0.51 percent, to $3.82/lb on Comex.
  
  "It was really the BOJ announcement that spurred the rises today but this is not going to carry very far. People have seen improved sentiment, they have seen the central banks take action, so the question is: does all this feed into improved activity?," said Credit Suisse metals analyst Ivan Szpakowski.
  
  "Real demand is still slow. The big questions are: will it improve? How much? How fast?"
  Copper pares gains as BOJ stimulus effect fades
  
  

What to Watch For:

8:30 a.m. ET: Housing Starts/Building Permits (August)

10:00 a.m. ET: Existing Home Sales (August)

10:30 a.m. ET: Weekly Petroleum Status Report