Written by Sumit Roy  |

October 15, 2012

Market Wrap: Gold & Silver Fall To 1-Month Lows; Brent-WTI Spread Hits $24; NatGas, Soybeans Plunge

Details

Commodities fell broadly.

Commodities fell broadly today, underperforming stocks, which rose on the back of stronger-than-expected corporate earnings announcements and economic reports. Banking giant Citigroup reported this morning that its profits in the third quarter topped analyst estimates.

In economic news, retail sales in the U.S. rose by 1.1 percent in September, better than the 0.8 percent increase that was expected. Meanwhile, the Empire manufacturing gauge improved from -10.41 in September to -6.16 in October.

Elsewhere, China reported that its exports grew by 9.9 percent year-over-year in September, up from 2.7 percent in August and above the 5.5 percent increase that was anticipated. Imports grew by 2.4 percent year-over-year, reversing most of August's 2.6 percent decline.

China's consumer price index in September rose by 1.9 percent year-over-year, down from 2 percent in August and equal to expectations.

• Gold and silver fell to one-month lows today amid technical selling. The yellow metal was last trading down by $17.78, or 1.01 percent, to $1736.70, while the gray metal lost $0.80, or 2.37 percent, to $32.72.
  
  Platinum shed $19.76, or 1.2 percent, to $1632.24 and palladium edged down by $4, or 0.63 percent, to $630.50.
  
  "Investors are getting a bit nervous following the recent rejection at $1,800," Saxo Bank vice president Ole Hansen said. "Many new positions in both exchange-traded funds and futures have been established in recent weeks, especially short term leveraged investors who are not married to their positions in the same sense as long term ETF investors."
  
  "We need to hold onto the $1,737 low in order to avoid a deeper correction at this time," he said. "Either OMT in Europe or a weaker dollar seem to be what we are lacking at the moment, so we could see investors... take some chips off the table while they wait for a better level to re-enter."
  
  
• Crude oil was mixed, as Brent rose by $0.69, or 0.6 percent, to $115.31, while WTI fell by $0.25, or 0.27 percent, to $91.61. The spread between the two benchmarks now stands at $23.70—the highest level in a year due to a glut of oil in the U.S. Midwest.
  
  Trade data over the weekend showed that China's crude oil imports totaled 4.9 mmbbl/d in September, up from August's 22-month low of 4.3 mmbbl/d.
  
  However, "crude imports still remain well below the level seen in the first half of the year, when between 5.3 and 6 million barrels per day were imported," said analysts at Commerzbank.
  
  
• Natural gas was lower today, as traders awaited the first cold snap of the heating season—which remains elusive. Prices were last trading down by $0.13, or 3.6 percent, to $3.48/mmbtu.
  
  
• The grain complex was lower today, led by soybeans, which is at the lowest level in 3 1/2 months.
  
  "It appears that the seasonality continues to be a significant headwind, particularly in the oilseed market," said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.
  
  Corn was last trading down by $0.17, or 2.26 percent, to $7.36/bushel, while soybeans shed $0.32, or 2.07 percent, to $14.91 and wheat lost $0.13, or 1.49 percent, to $8.44.
  
  
• Copper was last trading down by $0.01, or 0.24 percent, to $3.69/lb on Comex.
  
  "Copper trading is range bound at the moments as in the short term the situation is still uncertain and investors are waiting for the Chinese GDP data and for news from LME week," T-commodity Consultant Gianclaudio Torlizzi said. "But in a long-term perspective, I think the price is more interesting as if on one hand it's true that copper stocks are high, on the other hand we expect China to soon implement stimulus policies which should boost the economy and metals demand."