Written by Sumit Roy  |

October 24, 2012

Morning Call: Gold & Silver Rebound On Bargain Buying, China Data; FOMC Rate Decision On Tap

Details

Commodities rise broadly.

Commodities are rising today on bargain buying after recent sharp declines, but global economic growth continues to be a concern after Markit reported that its Composite Purchasing Managers Index for the eurozone fell from 46.1 to 45.8 in October, the lowest level since June 2009.

News in China and the U.S. was a little more upbeat. HSBC said that its PMI manufacturing gauge for China rose from 47.9 to 49.1 in October, the best level in three months. Meanwhile, bellwether companies such as Boeing and AT&T posted better-than-expected earnings, reversing some of the profit-related gloom from earlier in the week.

The Federal Open Market Committee is scheduled to make its latest policy decision at 2:15 p.m. ET. The central bank is not expected to announce any new initiatives after having unveiled QE3 at its last meeting in September.

Taking a look at currency markets, the U.S. Dollar Index was last trading up by 0.07 percent to 80.03.

• Gold and silver are slightly higher after dropping to six-week lows on Tuesday. The yellow metal was last trading up by $1.65, or 0.1 percent, to $1709.30, while the gray metal added $0.29, or 0.91 percent, to $31.98.
  
  Platinum gained $3, or 0.19 percent, to $1574.75 and palladium edged up by $4.25, or 0.71 percent, to $601.
  
  "The next level of support after [$1700] is $1,660 an ounce, which coincides with gold prices before Fed Chairmen Ben Bernanke's speech on economic policy at a Jackson Hole, Wyoming, summit on 31 August," analysts at HSBC said. "We continue to see modest pressure on gold prices in the near term, barring any surprise announcements by the FOMC for additional monetary-easing policies."
  Gold holds near seven-week low; eyes on Fed meeting
  
  
• Crude oil is higher ahead of the EIA's Weekly Petroleum Status report. The less-authoritative API figures showed that crude inventories rose by 0.3 mmbbl, gasoline inventories rose by 0.2 mmbbl, and distillate inventories fell by 0.9 mmbbl last week.
  
  Brent was last trading up by $0.51, or 0.47 percent, to $108.76, while WTI added $0.13, or 0.15 percent, to $86.80.
  
  "We have seen a massive price slump in the past few days, so it's not surprising to see prices rebound," said Carsten Fritsch, analyst at Commerzbank. "The sharp decrease before was exaggerated. There are still supply-side risks. China helped to improve market sentiment."
  Oil Falls to Three-Month Low as Earnings Bolster
  
  
• Natural gas was last trading down by $0.01, or 0.4 percent, to $3.52/mmbtu. Weather forecasts continue to project colder-than-normal temperatures across the United States at the end of the month.
  Cheap Natural Gas Gives New Hope to the Rust Belt
  
  
• The grain complex is higher, as corn adds $0.02, or 0.3 percent, to $7.58/bushel, while soybeans rises by $0.10, or 0.64 percent, to $15.63 and wheat gains $0.05, or 0.58 percent, to $8.74.
  
  After weeks of speculation, Ukraine announced that it would be banning exports of wheat starting November 15.
  
  "The Ukrainian export ban is supportive for wheat but it had been widely expected and priced into the market so the price impact is relatively modest," said Rabobank analyst Erin FitzPatrick. "But the decision will reduce the possibility that more Black Sea region wheat will come into the export sector for the rest of this marketing year."
  Wheat up after Ukraine confirms export ban
  
  
• Copper was last trading up by $0.01, or 0.22 percent, to $3.58/lb on Comex.
  
  "I don't think one should expect too much from China in terms of a pick-up given the government is in transition. Also post LME Week most people are neutral towards metals," said Societe Generale analyst Robin Bhar. "The negative news is priced in but, equally, until economies start to move higher, we're not going to challenge the upside."
  Copper up off six-week low on China optimism
  
  
  

What to Watch For:

10:00 a.m. ET: New Home Sales (September)

10:30 a.m. ET: Weekly Petroleum Status Report

2:15 p.m. ET: FOMC Rate Decision