Written by Sumit Roy  |

September 24, 2012

Market Wrap: Gold, Silver, Oil Lead Commodities Lower Amid Economic Concerns

Details

None of the major commodities was immune from today's selling pressure.

Commodities fell across the board, as economic concerns outweighed global central banks' stimulus efforts. In today's news, the Chicago Fed National Activity Index fell from -0.12 to -0.87 in August, the lowest level since 2009. Meanwhile, the Dallas Fed Activity Index rose from -1.6 to -0.9 in September.

The U.S. Dollar Index rose by 0.35 percent to 79.61 on safe-haven buying.

• The dollar's rise pressured gold and silver today. The yellow metal was last trading down by $11.17, or 0.63 percent, to $1761.93, while the gray metal lost $0.62, or 1.17 percent, to $33.92.
  
  Platinum fell by $13.50, or 0.83 percent, to $1622.25 and palladium shed $26.50, or 3.94 percent, to $645.25.
  
  "Part of the issue is the lack of obvious catalysts in the near term to take gold prices higher," Deutsche Bank Analyst Daniel Brebner said. "We have some continuing risk issues in Europe, U.S. manufacturing data continues to be for the most part disappointing, and Chinese growth continues to be a real risk as well in the near term. There are a number of low growth concerns which could underpin the dollar, and keep gold somewhat moribund near term."
  
  "But I do think we will likely see over the next quarter or so greater policy action both in Europe and China to support growth within those regions," he added. "The likelihood is for further accommodative monetary policy in both regions, and that could keep the gold price moving higher. We think we will see $2,000-plus gold prices in the first half of next year."
  
  
• Crude oil retreated, as Brent shed $2.08, or 1.87 percent, to $109.34, while WTI sunk $1.61, or 1.73 percent, to $91.28.
  
  "Slowing economic growth is the major concern for oil markets," said Olivier Jakob, energy consultant at Petromatrix.
  
  
• Natural gas was last trading down by $0.04, or 1.53 percent, to $2.84/mmbtu. Prices remain range-bound between $2.70 and $3.20.
  
  
• Grains joined today's broad downdraft in commodities. Corn was last trading down by $0.04, or 0.47 percent, to $7.45/bushel, while soybeans fell by $0.09, or 0.55 percent, to $16.13 and wheat shed $0.03, or 0.31 percent, to $8.95.
  
  "The price of wheat is holding its own at around $9 per bushel because the heavy rainfall in Argentina is meanwhile being viewed increasingly critically and because Australia remains too dry," said analysts at Commerzbank. "What is more, a lack of consensus in the Russian government is keeping speculation about possible export restrictions alive."
  
  
• Copper lost $0.06, or 1.52 percent, to $3.74/lb on Comex.
  
  "People are in a wait and see mode. I think markets don't appreciate what the impact can be. Most of these [central bank] measures are unlimited in nature, they take time to flow through. We see prices pretty well supported through to the year-end," Macquarie Analyst Ryan Belshaw said.