Written by Sumit Roy  |

October 01, 2012

Market Wrap: Gold Hits Highest Level Of The Year, Silver Touches 7-Month High; NatGas Surges 4% On Weather

Details

Gold and natural gas rise, while soybeans plunge.

Most commodities rose today after data from the Institute for Supply Management showed that the U.S. manufacturing sector unexpectedly bounced back from a three-month slump in September. ISM's manufacturing gauge rose from 49.6 to 51.5, putting it back above the 50 level that separates contraction from expansion. Analysts had expected the index to remain stable below 50.

Meanwhile, manufacturing data from elsewhere around the world came in close to expectations. China's official PMI Manufacturing Index rose from 49.2 to 49.8 in September, remaining just under the key 50 level.

The equivalent gauge in the eurozone ticked up from 46 to 46.1.

The U.S. Dollar Index was last trading down by 0.2 percent to 79.77.

• The precious metals sector put in a solid gain today. Gold was last trading up by $8.13, or 0.46 percent, to $1780.23 after reaching $1791.45 earlier—the highest level of the year. Silver jumped $0.36, or 1.06 percent, to $34.91 after reaching $35.36  earlier—a seven-month high.
  
  Platinum edged up by $13.25, or 0.8 percent, to $1675.25 and palladium rose by $5.25, or 0.82 percent, to $644.25.
  
  "We seem to have established a base now down at $1,740 [for gold], but we also seem to have a ceiling in place between $1,785 and $1,790," Dave Govett, head of precious metals at Marex-Spectron, said.
  
  "I think it will take some help from other markets to break us one way or the other, as gold does not yet seem to have the appetite to do this by itself. That said, I still favor buying dips in the market and think that before long we will see a renewed assault on $1,800. But in the meantime, trade the ranges and watch the dollar, stocks and oil for short term direction."
  
  
• Crude oil was mixed today. Brent was last trading down by $0.22, or 0.2 percent, to $112.17, while WTI rose by $0.37, or 0.4 percent, to $92.56.
  
  A survey by Bloomberg showed that OPEC crude production fell by 454 Kbbl/d to 31.98 mmbbl/d in September, the largest decline since March 2011.
  
  Meanwhile, analysts at Bank of America said they expect Brent to rise to $120 by the end of the year due to strong economic growth.
  
  
• Natural gas rose by $0.14, or 4.07 percent, to $3.46/mmbtu after touching $3.48 earlier—the highest level in 10 months. The latest weather forecasts indicate that much-cooler-than-normal temperatures will spread across the United States during the middle of the month, making for a bullish start to the winter heating season.
  
  
• The grain complex was mixed. Corn was last trading up by $0.02, or 0.3 percent, to $7.59/bushel, while soybeans shed $0.27, or 1.7 percent, to $15.74 and wheat fell by $0.27, or 2.94 percent, to $8.76.
  
  "Soybean yields, from start to finish, have been better than expected," said Jim Gerlach, president of A/C Trading.
  
  "Any time you've got yields rising and you're in the middle of harvest and you've got the funds relatively long, it's very difficult to sustain a market. You have to feed a bull market every day and there's nothing to feed it right now," he said.
  
  
• Copper was last trading up by $0.03, or 0.72 percent, to $3.79/lb on Comex.
  
  "On Friday, U.S. non-farm payrolls are due. This time, the release will be watched even more closely than usual as the Fed has made its quantitative easing program dependent on labor market developments. The data can thus provide guidance on how much easing one can expect," analysts at Credit Suisse said.