Written by Sumit Roy  |

October 23, 2012

Morning Call: Gold & Silver Plunge To Lowest Since Early September Amid Global Growth Concerns, Oil Falls

Details

Commodities trade lower across the board.

Another round of disappointing corporate earnings announcements is sending stock markets lower, and in turn, dragging commodities down. DuPont, the chemicals company, missed analysts' profit expectations amid weak global sales, while diversified manufacturer 3M cut its earnings forecast for the year.

"It was ever so modest and ever so subtle but there was a shift to the markets really starting to trade on U.S. economic and U.S. company fundamentals and the market didn't seem to care much about what central banks were doing or what was going on in Europe," said Keith Bliss, senior vice president at Cuttone & Co in New York. "Then all of a sudden—wham—we get weaker earnings this quarter and it refocuses everybody's attention on the global economy."

The economic news front is quiet again, with no major releases scheduled for today.

Taking a look at currency markets, the U.S. Dollar Index was last trading up by 0.23 percent to 79.83.

• Gold and silver are down to the lowest levels since early September, as investor risk appetite retreats, prompting liquidation of the metals. The yellow metal was last trading down by $18.45, or 1.07 percent, to $1710.05, while the gray metal fell by $0.53, or 1.63 percent, to $31.90.
  
  Platinum fell by $31.25, or 1.93 percent, to $1578.24 and palladium shed $22.30, or 3.57 percent, to $602.70.
  
  "You've had QE priced in and what we're seeing now is a bit of a retracement following that," Deutsche Bank analyst Daniel Brebner said. "We have a pause in monetary policy action—it's very unlikely we're going to see anything in the U.S. and China while there is political transition.
  
  "Conditions economically remain tenuous ... there are concerns with respect to growth, and therefore the potential for deflation is starting to pick up a little bit," he added. "This is really causal to gold's decline. We're likely to see some support around the 1,700 level, but right now I'd characterize the market as being in a trading range, with some downward pressure within that."
  Gold Hits 6-Week Low As Equities Weaken, Dollar Firms
  
  
• Crude oil is joining broad-based pullback this morning. Brent was last trading lower by $0.76, or 0.69 percent, to $108.68, while WTI lost $1.40, or 1.67 percent, to $87.25.
  
  "There is a correlation between the equity markets and the oil price," Michael Hewson, analyst at CMC Markets, said. "We've had various companies missing price forecasts and these concerns about the future outlook for earnings is keeping a lid on oil prices."
  Oil Falls For Fourth Day
  
  
• Natural gas was last trading up fractionally to $3.46/mmbtu, a gain of 0.14 percent, after tumbling on Monday. The latest weather forecasts continue to show colder-than-normal temperatures across the population-heavy areas of the United States at the end of the month.
  Daniel Yergin: The Real Stimulus: Low-Cost Natural Gas
  
  
• The grain complex is lower, as corn sheds $0.05, or 0.59 percent, to $7.57/bushel, while soybeans loses $0.11, or 0.7 percent, to $15.36 and wheat falls by $0.07, or 0.8 percent, to $8.71.
  
  "The [wheat] market is drifting a little as confirmation is awaited about export restrictions by Ukraine," one European trader said.
  US Wheat Lower As Rally Stalls, Soy Also Falls
  
  
• Copper was last trading down by $0.05, or 1.33 percent, to $3.57/lb on Comex, the lowest level since September 7.
  
  "Exogenous factors are still in control and the market is still waiting for some direction from China or elsewhere," said analyst Leon Westgate at Standard Bank. "But I'm not sure there's any reason for China to be very enthusiastic about switching the (stimulus) taps back on. I would expect more concrete plans to emerge next year, rather than this year, particularly as the data hasn't been that bad."
  Copper slides to 6-week low on dollar, weak China
  
  

What to Watch For:

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