Written by Sumit Roy  |

October 16, 2012

Morning Call: Gold & Silver Rise Amid Strong Earnings, Dollar Decline; WTI-Brent Spread Narrows But Near Highs

Details

Commodities mostly rise.

Another batch of strong U.S. corporate earnings announcements is lifting stock markets for a second day. Commodities are indirectly benefiting as well, as investor sentiment improves. Goldman Sachs, Mattel, UnitedHealth, among others, reported stronger profits than analysts had expected for the third quarter.

In today's economic news, the consumer price index in the U.S. grew by 2 percent year-over-year in September, up from 1.7 percent in the prior month and slightly higher than the 1.9 percent that was anticipated. Core prices—excluding food and energy—also grew by 2 percent year-over-year.

The U.S. Dollar Index was last trading down by 0.44 percent to 79.39.

• The dollar's decline is helping gold and silver recover some of their recent losses. The yellow metal was last trading up by $7.30, or 0.42 percent, to $1744.85, while the gray metal added $0.27, or 0.83 percent, to $32.99.
  
  Platinum edged up by $3.49, or 0.21 percent, to $1643.74 and palladium rose by $8, or 1.26 percent, to $641.50.
  
  "Gold rose sharply from mid-August onwards on expectations of a further round of quantitative easing in the U.S.," BNP Paribas Analyst Anne-Laure Tremblay said. "Since mid-September, the upward trend [has] stalled alongside renewed concerns about weak economic growth, particularly in China. Uncertainty surrounding the euro zone sovereign debt crisis is also weighing on sentiment."
  Gold lifts from 1-month low as euro, stocks rise
  
  
• Crude oil is narrowly mixed, as Brent sheds $0.36, or 0.31 percent, to $115.44, while WTI adds $0.31, or 0.34 percent, to $92.16. That brings the WTI-Brent spread to $23.28, just off the $24.28 high from Monday.
  
  "The Brent market has been inflated by declining North Sea production and hiccups in that production, like the recent problems with Buzzard," said Christopher Bellew, senior broker at Jefferies Bache. "The price of WTI is also being distorted by the huge increase in U.S. domestic oil production."
  Brent Premium Rises to One-Year High; WTI Crude Declines
  
  
• Natural gas was last trading down by $0.03, or 0.98 percent, to $3.45/mmbtu.
  
  "Without early heating-season demand, the market is starting to balance out," said Gene McGillian, analyst and broker at Tradition Energy. "The buyers are bailing out."
  Gas Slides on Forecasts for Above-Normal Temperatures
  
  
• The grain complex is bouncing after falling the past two sessions. Corn was last trading up by $0.07, or 0.85 percent, to $7.44/bushel, while soybeans gained $0.10, or 0.67 percent, to $15.03 and wheat rose by $0.08, or 0.97 percent, to $8.57.
  
  "Today's bounce is largely driven by bargain-hunting as end-users are taking this opportunity to lock in supplies," said Lynette Tan, analyst at Phillip Futures. "Corn supplies are going to be very tight and any dip in prices will allow importers to buy."
  U.S. soy rebounds on hopes for China demand; corn firms
  
  
• Copper was last trading up by $0.02, or 0.41 percent, to $3.72/lb on Comex.
  
  "Market positioning is relatively light and, whilst the recent economic data out of the U.S. has been good, it is firmer evidence of a turn in China that will drive base metals further from here," Marex Spectron Macro Strategist Guy Wolf said.
  Copper firms from 1-month low on stronger equities, euro
  
  
  

What to Watch For:

8:30 a.m. ET: Consumer Price Index (September)

9:15 a.m. ET: Industrial Production (September)

4:30 p.m. ET: API Weekly Statistical Bulletin