Written by Sumit Roy  |

October 04, 2012

Market Wrap: Gold Hits New High For The Year Just Under $1800 As Dollar Plunges, Oil Surges Ahead Of Jobs Report

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Commodities rose across the board.

A plunge in the U.S. dollar and hopes that Friday's employment report in the U.S. will come out better than expected lifted commodities across the board today. Employers are expected to have added 115K jobs last month, while the unemployment rate is expected to tick up from 8.1 to 8.2 percent.

In today's news, the number of people filing for unemployment benefits rose a modest 4K to 367K last week.

Meanwhile, the ECB kept its benchmark overnight interest rate steady at a record low 0.75 percent. The central bank's president, Mario Draghi, said he sees risks to growth biased to the downside.

The U.S. Dollar Index fell by 0.76 percent to 79.36.

• The dollar's decline pushed gold to a new high for the year. The yellow metal was last trading up by $11.70, or 0.66 percent, to $1790.70 after reaching as high as $1796.70, which tops the previous high of $1791.45 set earlier this week. Meanwhile, silver added $0.32, or 0.92 percent, to $34.96.
  
  Platinum gained $30, or 1.78 percent, to $1714 and palladium rose by $19, or 2.91 percent, to $671.
  
  "Although we don't expect any further major policy announcements, all the world's central banks are in an easing mode," said Matthew Turner, analyst at Mitsubishi Corp.
  
  "Gold is well supported as new money keeps entering the market in the new quarter," added a Tokyo-based trader.
  
  
• Crude oil surged, recovering the prior session's entire decline, as traders speculated that the recent drop was overdone. Brent was last trading up by $4.47, or 4.13 percent, to $112.64, while WTI gained $3.58, or 4.06 percent, to $91.72.
  
  "[The oil market] was oversold and then ratcheted up by tensions between Turkey and Syria," said Christopher Bellew, a broker at Jefferies Bache. "It was quite a steep fall, so it could go back up to levels we saw two days ago."
  
  
• Natural gas rose by $0.01, or 0.32 percent, to $3.41/mmbtu after the EIA reported that operators injected 77 billion cubic feet into storage last week, above the 70 to 74 bcf that most analysts were expecting. Forecasts for cold weather in the coming weeks—which should boost demand for gas—kept sellers at bay.
  
  
• The grain complex jointed in today's broad-based rally. Corn was last trading up by $0.04, or 0.61 percent, to $7.61/bushel, while soybeans gained $0.25, or 1.6 percent, to $15.56 and wheat traded fractionally higher at $8.72.
  
  "The selling pressure which we have seen in past weeks is starting to ease and we are seeing more attention returning to the tight supply fundamentals in both soybeans and corn," said Rabobank analyst Erin FitzPatrick. "This is also supporting wheat. The price drops we have seen in soybeans, especially for parts of Wednesday's session, have attracted more end-user buying."
  
  
• Copper was last fractionally higher to $3.79/lb on Comex.
  
  "[A potential bailout for Spain] removes some uncertainty in the market. It is a not a question of if but when for Spain [to ask for a bailout] and that will be seen as a huge relief for the market," said Robin Bhar, analyst at Societe Generale. But the potential upside for copper is pretty limited whilst there is uncertainty about China's growth and U.S. growth and with the euro zone in recession, and that is going to keep a lid on rallies."