Written by Sumit Roy  |

September 26, 2012

Morning Call: Gold Tumbles To $1745 As Dollar Rallies, WTI Falls To $90 Ahead Of Inventory Report

Details

With the exception of natural gas, commodities are lower across the board.

Economic concerns and a jump in the U.S. dollar are pressuring commodities for a second day. While there are no major macro data slated for release today, economic growth is well-known to be sluggish in the U.S., Europe and China.

Unprecedented monetary action by the European Central Bank, and more recently the Federal Reserve, have kept commodity prices elevated, but to see further rallies from here may require an actual improvement in economic indicators.

The U.S. Dollar Index was last trading up by 0.47 percent to 79.92.

• Technical selling is pushing gold lower after prices failed to make progress in recent days. The yellow metal was last trading down by $15.92, or 0.9 percent, to $1744.73, while silver shed $0.21, or 0.62 percent, to $33.55.
  
  Platinum lost $6.50, or 0.4 percent, to $1621.75 and palladium sagged $16.25, or 2.54 percent, to $623.
  
  "After rapidly rising between mid-August and mid-September, gold has since been consolidating," BNP Paribas Analyst Anne-Laure Tremblay said. "Short term, we could see a limited correction before the price resumes its ascent.
  
  "The U.S. dollar has been strengthening of late, particularly against the euro. This is likely weighing on the gold price. Beyond this, the gold market is just taking a breather, as it is not far off the $1,800 an ounce level, which constitutes a strong resistance."
  Gold slips as dollar strengthens, stocks extend losses
  
  
• Crude oil is lower ahead of the EIA's Weekly Petroleum Status Report. The less-authoritative API report showed that crude inventories rose by 0.3 mmbbl, gasoline inventories rose by 0.1 mmbbl, and distillate inventories fell by 0.5 mmbbl last week.
  
  Brent was last trading down by $1.67, or 1.51 percent, to $108.78, while WTI lost $1.27, or 1.39 percent, to $90.10.
  
  "The quantitative easing euphoria has eased," Ole Hansen, senior manager of trading advisory at Saxo Bank A/S, said. "Renewed worries, especially in Spain, are putting the focus back onto global growth and the potential for subdued demand for oil."
  Oil Falls to 7-Week Low on Demand Outlook
  
  
• Natural gas is bucking the trend to rise today. The October futures contract will expire at the end of trading today. It was last trading up by $0.01, or 0.41 percent, to $2.94/mmbtu. The November contract will move to the front of the board on Thursday; it was last trading near $3.10.
  Shale Fracking Makes U.S. Natural Gas Superpower: Now What?
  
  
• The grain complex is lower, as corn sinks $0.09, or 1.21 percent, to $7.35/bushel, while soybeans loses $0.21, or 1.32 percent, to $15.90 and wheat falls by $0.09, or 1.04 percent, to $8.77.
  
  "We are seeing a very negative impact on grains today from broader outside markets with crude oil down and the dollar rising," said Rabobank Analyst Erin FitzPatrick. "We are also seeing rapid harvest progress in the U.S. Although the harvest progress is not particularly bearish when you look at the firm cash markets and the overall tight supply outlook, it is currently putting overall weakness into grains futures."
  Soybeans, corn, wheat fall on harvest pressure, dollar
  
  
• Copper was last trading down by $0.06, or 1.52 percent, to $3.72/lb on Comex.
  
  "I think it's just taking a breather after the maybe excessive price gains in the weeks before," said Daniel Briesemann, analyst at Commerzbank. I am confident that we are on a lasting upward trend," he said, citing recently announced infrastructure projects in China as support for prices. "At the moment I'm not concerned about China at all."
  Copper slides on renewed European debt worries
  
  
  

What to Watch For:

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

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