Written by Sumit Roy  |

October 08, 2012

Market Wrap: Silver Sinks After World Bank Downgrades China Growth, Oil Edges Lower, NatGas Rises

Details

Commodities fell broadly.

News flow was relatively light in today's session, as U.S. bond markets and government offices remained closed for Columbus Day. Stock and commodity markets were open, but fell broadly 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.

The U.S. Dollar Index rose by 0.31 percent to 79.58.

• The dollar's rally pressured precious metals. Gold was last trading down by $6.51, or 0.37 percent, to $1774.09, while silver fell by $0.53, or 1.53 percent, to $34.
  
  Platinum lost $14.90, or 0.87 percent, to $1693.10 and palladium shed $4, or 0.6 percent, to $657.75.
  
  "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."
  
  
• Crude oil was 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 $0.40, or 0.6 percent, to $111.62, while WTI shed $0.48, or 0.53 percent, to $89.40.
  
  "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.
  
  
• Natural gas was last trading up by $0.02, or 0.44 percent, to $3.41/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.
  
  
• The grain was mixed, as corn shed $0.05, or 0.7 percent, to $7.43/bushel, while soybeans lost $0.05, or 0.34 percent, to $15.46 and wheat gained $0.05, or 0.55 percent, to $8.62.
  
  
• Copper was last trading down by $0.06, or 1.56 percent, to $3.72/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.