Written by Sumit Roy  |

September 27, 2012

Morning Call: Gold Rebounds As Factory Orders Plunge 13%, NatGas Rises To $3.25 Ahead Of Inventory Report

Details

Commodities are mostly higher, but grains underperform.

Commodities are broadly higher today after the release of a mixed batch of economic data in the U.S. The world's largest economy only grew by 1.3 percent annualized in the second quarter, according to the latest estimate from the government. That's down from the prior estimate of 1.7 percent.

Meanwhile, durable goods orders plummeted 13.2 percent in August, well below the 5 percent decline that was anticipated. Excluding the transportation sector, orders fell by 1.6 percent, lower than the 0.2 percent increase that was expected.

On the positive side, the number of people filing for unemployment benefits dropped from 385K to 359K last week, below the 375K that was expected.

The U.S. Dollar Index was last trading down by 0.19 percent to 79.74.

• The precious metals sector is higher. Gold was last trading up by $11.32, or 0.65 percent, to $1764.07, while silver rose by $0.31, or 0.94 percent, to $34.28.
  
  Platinum and palladium are up amid strike activity in South Africa. Platinum was last trading up by $19.75, or 1.21 percent, to $1655.75 and palladium advanced $4.50, or 0.71 percent, to $634.
  
  "Short term, I think we'll see more consolidation. We'll have to see how the dollar performs," Credit Agricole Analyst Robin Bhar said. "As we've seen in the last 48 hours, the crisis in Europe has resurfaced. If it comes back with a vengeance, the euro will stay weak, the dollar will stay strong, and that's going to cap the gold price," he said.
  Gold edges higher as dollar softens, stocks recover
  
  
• Crude oil is solidly higher today, as Brent adds $1.62, or 1.47 percent, to $111.66, while WTI gains $1.31, or 1.46 percent, to $91.29.
  
  "The ongoing geopolitical tensions in the Middle East plus the prospect of further injections of liquidity by the central banks make any further decrease [in oil prices] unlikely," said analysts at Commerzbank.
  Oil above $110 on supply woes, euro crisis caps gains
  
  
• Natural gas is near the highest levels since July ahead of the EIA's Weekly Natural Gas Storage report. Inventories are expected to have grown by 74 to 78 billion cubic feet last week, according to a survey of analysts by Platts.
  
  The November futures contract is now the front month after the expiry of October futures on Wednesday. Prices were last trading up by $0.03, or 1 percent, to $3.25.
  Ahead of the Bell: Natural gas supplies
  
  
• The grain complex is underperforming today. Corn was last trading down by $0.03, or 0.45 percent, to $7.22/bushel, while soybeans fell by $0.02, or 0.13 percent, to $15.71 and wheat edged up by $0.02, or 0.29 percent, to $8.72.
  
  "With corn planted early in the season in the United States and the record pace of harvest for corn and soybeans, it is pushing prices lower," Abah Ofon, commodities analysts at Standard Chartered, said.
  Prices slip on fast pace of harvest, pre-data caution
  
  
• Copper was last trading up by $0.02, or 0.55 percent, to $3.73/lb on Comex.
  
  "People are a bit more clear on the macro outlook for China for the end of the year. It is likely to register growth of just under 8 percent so that will be positive for base metals," said Andrey Kryuchenkov, analyst at VTB Capital. "But until we hear more about what is happening in Spain and the euro zone, copper is likely to trade within its current range."
  Copper rises on China demand hopes, euro zone a dampener
  
  

What to Watch For:

8:30 a.m. ET: Initial Jobless Claims

8:30 a.m. ET: Durable Goods Orders (August)

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

10:30 a.m. ET: Weekly Natural Gas Storage Report