Written by Sumit Roy  |

October 08, 2012

Morning Call: Gold, Oil Decline On China Slowdown Concerns; California Gasoline Prices Spike To Record

Details

Commodities trade broadly lower.

Commodities are broadly lower today after the World Bank cut its forecast for Chinese economic growth. The Asian giant is expected to grow by 7.7 percent this year, down from a prior estimate of 8.2 percent. Growth is anticipated to pick up to 8.1 percent next year, but that's down from an earlier estimate of 8.6 percent.

U.S. bond markets are closed today in observance of Columbus Day, however, stock and commodity markets will trade as usual.

The U.S. Dollar Index was last trading up by 0.38 percent to 79.64.

• The dollar's rally is pressuring precious metals. Gold was last trading down by $10.85, or 0.61 percent, to $1769.75, while silver fell by $0.61, or 1.75 percent, to $33.92.
  
  Platinum lost $25, or 1.46 percent, to $1683 and palladium shed $10.50, or 1.59 percent, to $651.
  
  "Although gold has lacked the appetite to overcome $1,800 - it's clear that the buying momentum evident last month has undoubtedly slowed down - both Friday's reaction and recovery post [jobs data] highlighted that sellers lack conviction while buyers are prepared to step in during pull-backs," UBS Analyst Edel Tully said. "This doesn't help gold break $1800, but for sure it highlights that there is little conviction to get out, even if the data isn't supportive. This highlights gold's supportive backdrop."
  Gold set for largest two-day fall since August
  
  
• Crude oil is lower today amid demand fears after California gasoline prices spiked to a record $4.67/gallon over the weekend due to a host of refinery outages in the region. Brent was last trading down by $0.79, or 0.71 percent, to $111.23, while WTI shed $1.16, or 1.29 percent, to $88.72.
  
  "Refinery outages on the West Coast led to significant swings in gasoline prices, as Tesoro and Valero began to ration demand, taking gasoline prices in the area back to all-time highs," Morgan Stanley said today in a report.
  Oil Declines a Second Day as Europe Ministers Meet Amid Slowdown
  
  
• Natural gas was last trading down by $0.05, or 1.38 percent, to $3.35/mmbtu.
  
  "Gas prices can't really shoot much more above $3.50 or $4" because then utilities pile back into coal, said Shiyang Wang, natural-gas analyst at Barclays Capital.
  Headwinds for Rally in Natural Gas
  
  
• The grain complex is slower, as corn sheds $0.08, or 1 percent, to $7.41/bushel, while soybeans loses $0.12, or 0.76 percent, to $15.39 and wheat trades fractionally lower to $8.57.
  European wheat edges lower, U.S. report eyed
  
  
• Copper was last trading down by $0.07, or 1.77 percent, to $3.71/lb on Comex.
  
  "Investors are dismayed by sluggish downstream demand in China. In copper, spot prices are still trading at a large discount to prompt-month futures. If this continues, there may be more downside room to copper futures," said Orient Futures Derivatives Director Andy Du.
  Copper at 1-week low on firm dollar, renewed growth worries
  
  
  

What to Watch For:

No notable releases